How to Calculate Mileage Reimbursement: Guide to Deductions

Some businesses will reimburse their employees for the miles they’ve driven for the company. Mileage reimbursement normally comes with a strict set of rules regarding how it’s reimbursed. Understanding what miles are able to be reimbursed is key, and so is the documentation of reimbursable miles. If you’re driving your personal vehicle for your company, keep reading to learn more about mileage reimbursement.

Here’s What We’ll Cover:

Step 1: Understand What Miles Are Reimbursable

Step 2: Log Your Miles

Step 3: Use a Mileage Rate Calculator

Step 4: Being Reimbursed for Miles, or Deducting Miles from Your Taxes

Key Takeaways

Step 1: Understand What Miles Are Reimbursable

Not all miles that you drive are going to be deemed reimbursable. An important part of being reimbursed for your mileage is knowing which miles you can be reimbursed for. Many organizations will have these standards written for you clearly. Some may pay you to drive to their business location. Or, if you’ve been assigned to a temporary work location, they may only pay you to drive to those temporary job locations.

Understanding Standard Mileage Rates

Another part of understanding that miles are reimbursable is knowing the standard mileage rates. A standard mileage rate is the amount of money that the organization will pay you per mile. It can be simplified by calling it the “rate per mile,” as well. Standard mileage reimbursement rates will differ from company to company. The standard rate may even differ from errand to errand. Educating yourself on company mileage rates is an important part of calculating reimbursement.

Step 2: Log Your Miles

If you plan on being reimbursed for your mileage, you’ll need to keep a mileage log. There are several ways to do this. The oldest way of tracking mileage is through manual mileage logs. These are handwritten notes on your reimbursable miles driven. They can be as simple as a notebook with figures written into them. There are also detailed mileage log reports available that are pre-made for you. There are also easy-to-use mileage tracking apps that automate the process for you. Which you’ll be able to use depends on your company. They may have specific requirements for mileage reimbursement.

Logging mileage is an easy process. Before you begin driving, write down the number on your odometer. Then, drive to the location that you need to be at for your job. Once you’ve reached your destination, write down the number on the odometer again. Subtract the first number from the second number, and you’ll have your reimbursable miles.

Step 3: Use a Mileage Rate Calculator

If you’re driving a lot for work, you may need a handy mileage calculator tool for your reimbursable miles. These tools make it easy to calculate your gas mileage. In the mileage reimbursement calculator you’ll have an area to input your miles driven. You’ll also be able to input the mile rate. Once both numbers are plugged in, it’ll give you your figure. While this can easily be done with a regular calculator, mileage rate calculators can be more useful. They should be used when different errands have different mileage rates. They allow for all of the information to be plugged in and calculated at once.

Step 4: Being Reimbursed for Miles, or Deducting Miles from Your Taxes

If your job is reimbursing you for mileage, then the last step is easy. Turn in all of your documentation, then check that you were reimbursed correctly. However, not all jobs offer mileage reimbursement. If that’s the case, you may want to deduct mileage from your taxes.

If you are using a mileage deduction on your taxes, you’ll need to know a few things first. There is a standard federal mileage rate for several different categories. Miles have to be logged for the following reasons:

• Business miles
• Medical purposes
• Moving purposes
• Driving for charitable organizations or charitable purposes

Each category has a specific mileage rate. To know exactly what they are, visit the IRS official website. They have all of the information required for mileage deductions listed there. Keeping all documentation for mileage logged is important when deducting mileage from your taxes. Should the IRS audit you, you’ll need to provide proof of the mileage driven. This proof is kept in your mileage logs.

Key Takeaways

If your company requires that you drive for work, tracking mileage is important. Whether you’re being reimbursed for your mileage, or deducting it from your taxes, the steps are similar. Be sure to keep logs of miles driven, and calculate your mileage accurately.

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