A mileage reimbursement program can be key for many businesses. But, often employees ask, "What does mileage reimbursement cover?" People who ask this question often have questions about specific expenses, like “does mileage reimbursement cover gas?” or “does mileage reimbursement cover wear and tear?” Let's go over the expenses covered, as well as some tips for a great reimbursement program.
What's Included In The Mileage Reimbursement?
So, what does mileage reimbursement cover? The mileage reimbursement covers the cost of operating a personal vehicle for business reasons. This includes the cost of things like gasoline, oil, maintenance and wear-and-tear. Your business can decide how to handle other driving-related expenses. This may include the costs of parking and tolls.
What Type of Business Travel Can I Be Reimbursed For?
A key part of figuring out what does mileage reimbursement cover is being aware of the specific types of business travel that it includes. And the good news is that while it does not apply to every single situation, there are plenty of scenarios where your employees can claim reimbursement and be compensated.
One example of travel that can be reimbursed is visiting customers or clients. When your employees go to meet a client or go to their home, that is the type of mileage that can be covered.
Another example of mileage reimbursement is driving to get suppliers or run errands. It can also be applied when employees visit a temporary job site.
When answering the question, “what does mileage reimbursement cover” you should also know that it’s possible to include expenses that are related to driving to and from business meals or entertainment. If your employees travel to seminars or even go to the airport for business travel, that is business mileage that can be reimbursed as well.
The important thing to remember is that even though there are quite a few instances where you could get reimbursed for miles, those miles need to be logged and tracked accurately in case the IRS performs an audit.
How Much Do Employers Have To Reimburse For Mileage?
There's no mileage reimbursement law that forces businesses to pay employees for driving. But, California and Massachusetts have rules which require a mileage reimbursement. There are also labor laws which may force businesses to reimburse some drives. Employers will offer a mileage reimbursement to attract and retain workers. It's easiest to peg the rate to the standard mileage rate of 53.5 cents per business mile in 2017. But, the government doesn't require this. If employees are reimbursed less than that rate, they may deduct the difference. This applies if they itemize their deductions and it exceeds 2 percent of their AGI.