Do you know what the IRS rules and regulations are for mileage reimbursement odometer readings?

Follow

We are not aware of any specific guidelines for documenting the readings of the vehicle odometer. Many companies use a mileage log that documents the business miles driven. The log may show the starting odometer miles at the beginning of the year and the ending miles at the end of the year. Some companies require the odometer readings to be documented monthly. As long as your mileage is documented and appears reasonable then it is generally considered acceptable as a reimbursement. You have flexibility with your internal processes to enforce how you would like to have the employee document their mileage.

Keep in mind that the IRS defines two plans in regards to documenting your reimbursements: an 1) accountable plan or 2) unaccountable plan. A brief description is follows:

Accountable Plans
To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules.

  1. Your expenses must be of the type for which a deduction would be allowed had you paid them yourself. The reasonable expenses of moving your possessions from your former home to your new home, and traveling from your former home to your new home are two examples.
  2. You must adequately account to your employer for these expenses within a reasonable period of time.
  3. You must return any excess reimbursement or allowance within a reasonable period of time.

Nonaccountable Plans
A nonaccountable plan is a reimbursement arrangement that does not meet the three rules listed earlier under Accountable Plans. In addition, the following payments will be treated as paid under a nonaccountable plan.

  1. Excess reimbursements you fail to return to your employer.
  2. Reimbursements of nondeductible expenses. (See above).

The definitions within each plan can be found at http://www.irs.gov/publications/p521/ar02.html#d0e1306. It is important to check with your tax advisor to make sure you are handling the reimbursements properly.

Have more questions? Submit a request

Comments