How do you determine mileage; is it from work site to place traveled to? What if the employee travels from home to another place? Do I then figure how many miles they would have traveled to work that day and deduct those? I am trying to come up with a policy. I have one person that abuses the mileage and I want to come up with specific mileage reimbursement rules. Any details on your mileage reimbursement program would be beneficial. Thank you!
Mileage reimbursement
Answers
Both my current and most recent employer, counted miles as over and above what would have been a normal commute. If it would have taken me 18 miles to travel to work, but only 11 to get to a day event, there is no reimbursement.
We use mapquest as the overriding item - that way no one can take a tour (stopping at every grocery store and mall) on their way somewhere and get reimbursed for doing their errands. One mapquest identifies mileage to/from the office and their home. The second mapquest shows distance either from home or work (where are they really starting from) to/from the event. The expense report reflects that they are getting the distance that exceeds their normal commute.
We have also set strict rules for when someone can/should rent a car. And in a salute to the folks who try to stretch the rules to work for them, we did have to print that they could not get both mileage and fuel reimbursement. Frustrating, but necessary sometimes.
Most of our customers use the standard IRS rate and reimburse for driving to an alternate work destination (a normal commute is not reimbursable by IRS standards). I have not seen anyone reduce the reimbursement by subtracting the normal commute - probably because the additional work for both the employee and Finance is not worth the savings to the Company and there is no IRS requirement for it. It would also create a custom list of standard commutes for each employee and could get messy quickly (what if an employee typically carpools or takes public transportation). But it is up to you to decide what you are willing to manage.
Fuel should only be reimbursed on company cars or rental cars - unless an employee calculates their actual costs (including like depreciation) and take that instead of the mileage reimbursement - and you don't want to manage that either.
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Actually, the IRS DOES technically require the commute adjustment in most circumstances if the organization wants to treat the mileage reimbursement as non-taxable. Look up "
Reg. §1.162-2(e); RR 99-7
But, pragmatically you are correct: Hardly anyone will actually do this.
We reimburse for the lesser of the two if traveling from home - so if mileage from Work to "Destination A" is 30 miles and home to "Destination A" is 45 miles we reimburse for the 30 miles. If they traveled from the office then we reimburse actual mileage.
We use the IRS standard rate and calculate miles from our office to the destination using Google Maps or Mapquest. If the employee wants to leave from home and go directly to the destination, we allow that as long as we get the Mapquest mileage from their home to the destination. It is a simple solution for us.
I'm surprised to see so many different answers. I truly thought the vast majority of organizations used the IRS rates and guidelines - that's what I've seen with all of my clients and have experienced through nearly all of my employers (only one exception and that was 15 years ago).
The mileage reimbursed is calculated by taking the distance traveled less the daily commute mileage of the employee. If driving to the office first and then traveling, then all of the travel mileage would be reimbursable.
So, I currently live 2 miles from my office - anything greater than that would be reimbursed. I used to live 40 miles from my office and my clients were all closer to my home than that, so I rarely was paid for my mileage because I usually went there straight from my home.
It seems pretty straightforward to me, but maybe that's just because I'm used to it. I would document the policy, stick it in the employee handbook, hold a
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