There are certain jobs out there that require a staff member to use a personal vehicle for business-related trips. An employer may offer Mileage Reimbursement to help compensate some costs that an employee encounters which is usually based on a fixed amount. To request mileage reimbursement from your employer, you will need to fill in a Mileage Reimbursement Form.
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A printable Mileage Reimbursement Form template can be downloaded by clicking the link below. The Internal Revenue Service (IRS) has a standard mile reimbursement rate which is currently 56 cents per mile (as of 2021). If an employee receives the standard reimbursement rate or something below this, the sum you get paid does not get taxed. However, any reimbursement received over this rate will be taxable so it may not always be in the best interests to request a higher rate from your employer.
Before agreeing to be reimbursed, it is important to consider all the costs and whether or not you will still be losing money. Petrol is just one of many things a vehicle requires. Think about what other costs are involved, weigh up the price of oil changes, tires, and general maintenance to ensure that you are not on the losing end of the deal.
Firstly, it is important to understand what your mileage rate is. This should be clarified with the employer. Do not automatically assume that you fall under the qualifying category for the IRS Mileage Reimbursement Rate as the IRS has its own specific guidelines in order for an individual to qualify. Also remember, if your reimbursement rate is above the IRS Mileage Reimbursement Rate, then you will be liable for tax.
If we take the Mileage Reimbursement Rate for 2021 which totals 56 cents per mile, the formula is fairly straightforward. If you have covered 500 miles then: [miles] x [rate] 500 x $0.56 = $280
This rate only applies in circumstances when an employee uses a private vehicle for work-related purposes. It takes into accordance the maintenance of the car as well. In situations where you are provided with a company car for business trips, the rate will be somewhat lower as the employee is only paid for operating the car. This rate should be clarified with your employer.
The method of tracking business miles as opposed to personal miles differs between different companies. An employer may make the employee responsible for controlling and reporting mileage independently. Other companies may install a GPS tracking device in vehicles to keep tighter control of the realistic mileage covered during business trips.
In order to meet the guidelines for the standard IRS Mileage Reimbursement, the following criteria have to be met:
If an employee is the owner of the car then they are permitted to use the standard mileage reimbursement from the year that the car was first used under a company. After this, the employee can opt to use standard mileage or actual expenses to calculate this. If a car is being leased, then you can only use the standard mileage rate if you choose to do so.
Filling out a Mileage Reimbursement Form is relatively easy providing you have the records on hand. Ensure you include the following:
Attach any relevant receipts for topping up the gas or general maintenance, if this is required by your employer.
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