Oftentimes employees will use their own vehicles for business reasons such as running errands, meetings, or having to attend other offices and locations. If these employees are using their cars frequently, companies typically must compensate them through employee mileage reimbursement. What this means is that you are allowing them to deduct these expenses on their tax returns the following year. It is a great thing as long as it is used in the right manner.

The main goal in doing this is to be sure that these are considered deductibles for you, but that they are not taxable for your employees. This can be confusing, but it can be done. To be sure this is done properly and legally, do the reimbursing through an accountable plan.

Thankfully, the government creates a \”Standard Mileage Rate\” each year and this would be a great template for you to use when doing your accounting. They have set a rate in 2011 of 51 cents a mile for business miles driven, 19 cents a mile driven for medical reasons, and 14 cents a mile for charity organizations. You take this price and multiply it by the number of miles traveled and you have the compensation cost.

In 2011, they deemed it alright to use this standard mileage rate for cars used for hire like taxis. This was not always the case, but they have made this possible. You cannot use this for more than 4 vehicles being used at the same time, however.

If you do have a great deal of vehicles driving for your business (10 or more), you can use the FAVR Allowance Method (Fixed and Variable Rate.) This gives you the opportunity to cover fixed costs for your workers such as their insurance, depreciation, registration, and license as well as their variable costs such as their gasoline per mile. This gives you a chance to cover more individuals and still obtain a tax write-off.

What you can and should do when paying your workers back is pay them based on the number of miles they drive for business-related events. Make sure that they are keeping track of these trips accurately. When filing taxes, the government wants to see records that are well kept which means both parties in this organization must be organized and ready to go. You do not want to be trying to remember past trips in March of the next year. Keep records and do it well.

Thankfully there are mileage logs that employees and employers can print off online and keep for their records. Some people keep these taped in their vehicles, others keep them inside of their desks and update them as they come in for work. Do what works best for you. Just make sure that they are as accurate as possible!

Employee mileage reimbursement is a great thing for workers and the companies. It helps alleviate the stresses of money, traveling, gasoline, and car repairs. With gas prices the way they are, some people cannot afford to travel on a day-to-day basis, but fortunately, we have this. About the author of this article: contact cardata office today to speak to our consultants and help you determine the employee mileage reimbursement or vehicle reimbursement amd choose the right plan for you.

CarData is a leading company that offers corporate reimbursement services and vehicle reimbursement for north American Companies.

CarData is a leading company that offers corporate reimbursement services and vehicle reimbursement for north American Companies. http://www.cardataconsultants.com/

Author Bio: CarData is a leading company that offers corporate reimbursement services and vehicle reimbursement for north American Companies.

Category: Business Management
Keywords: Car, automotive, business, vehicle reimbursemen, employee mileage reimbursement, society, management