Read This if You Drive Your Car for Work
If you drive your own car or truck for your job, then you need to know the federal mileage rate. For 2013, it’s $.565 per mile. That’s 56.5 cents per mile. For every mile you drive for work-related purposes other than commuting, either your employer will reimburse you or you can deduct the mileage on your federal income tax return each year. However, if your employer reimburses you at the full federal mileage rate, you cannot then turn around and take a business deduction on your federal income tax return. That’s called double dipping.
Employer Reimbursement vs Tax Deduction
How your company works is entirely up to those who run it, of course. They set the travel policies and they are not required to reimburse their employees for anything if they don’t want to…it’s a free country. If you are going to be driving your car for your employer let’s say to a conference, then it’s wise to find out how the mileage rate is handled.
Yes, it’s a free country and the federal government isn’t really supposed to tell private businesses owners how to run their business. Yes, the Feds can impose federal regulations and standards that are designed to protect us all and make things fair, but forcing businesses to pay a certain mileage rate or to pay for business miles at all, that’s just un-American. So suffice it to say, if your company reimburses you for business miles driven, it just makes it convenient for you. You as the employee who drives business miles for his or her company with his or her own vehicle, will get paid either way. Either your employer will reimburse you for business miles or the IRS will let you deduct those business miles on your income taxes.
If Your Employer Reimburses You at a Lower Mileage Rate
Some companies will reimburse you for the miles you drive. Some don’t, and you recoup that cost when you file your federal income tax return with the IRS. Some companies reimburse you but only a little bit. What to do then? You seek the difference with the IRS.
If your work reimburses you less than the standard mileage rate, consider the difference as Travel Expenses on your tax form. Just multiply the number of miles you drove by the amount of money you fall short in employer reimbursement. For example, if the federal mileage rate is $.565 and your employer only reimbursed you $.355 and you drove 1000 miles, take the difference in rates: $.2 and multiply by 1000 and you get $200.
There’s a form for that: IRS form 2106-EZ Unreimbursed Employee Business Expenses. Use form 2106-EZ to deduct the difference between the federal mileage rate and what your employer pays, if it’s less.