What is Mileage Reimbursement
Business owners and consumers have taxes on the brain again. Enjoying tax savings can feel intimidating, but taking advantage of the deductions available doesn't have to be confusing. For example, workers may often consider writing off the mileage they incur for their employment, and employers also find value in these deductions.
The IRS even released the 2022 standard mileage rates to help taxpayers file more effectively. Of course, decreasing taxable income is always a plus as it allows earners to take home more hard-earned money. While there is no law requiring the reimbursement, there are genuine reasons it might be in the interest of employees and employers.
The benefits of mileage reimbursement even extend beyond saving money on gas and include:
Employer and employee tax benefit
Reimbursements are not a part of taxable income if they don't exceed the IRS mileage rate
Employers enjoy tax breaks on mileage reimbursements as they count as deductible expenses
It covers the expense of driving a personal vehicle for work
Preferable over a car allowance at tax time
Covering the cost of mileage and vehicles expenses can be made simpler thanks to mileage reimbursement. Let's look at what makes this cost-per-mile so mentionable for employees.
What qualifies as mileage reimbursement
Mileage reimbursements are the deductible operating costs of automobile use. That use can be for business, charitable, medical, or moving purposes.
There are both variable costs and fixed ones associated with operating a vehicle. These expenses could be thought of as a barrier for some employees. As a result, some employers have taken action to help attract and retain employees on this front.
The reimbursement is not subject to tax, as it is not considered as income, so long as it does not exceed the IRS mileage rate.
How to calculate mileage reimbursement
When it comes time to file your taxes, calculating mileage reimbursement can be simple. It all begins with knowing the current IRS mileage rate and applying it effectively to your travel dollars.
For 2022, the mileage rate is 58.5 cents per mile for any business use of a vehicle. That rate is an increase of 2.5 cents from the 2021 rate. Additionally, the miles driven for moving purposes for active-duty military or medical purposes is 18 cents per mile.
Take the number of miles driven and multiply it by that rate per mile. Another calculation is necessary if you use the vehicle for business and personal reasons. Take your business miles and divide them by total miles. This rate applies to your mileage to determine the reimbursement amount.
Finding the business miles driven is critical since some vehicles are for mixed-use. This calculation makes the most out of the available reimbursement rate. It also ensures you receive a fair amount for the cost you incur for operating and maintaining the vehicle.
How to determine if mileage is tax deductible
As shown in the description above, there are both personal, and business uses for a vehicle. If a driver uses their car exclusively for their job or business, all of the miles driven are deductible.
Mileage accrued and a vehicle expense of a car driven for other purposes are subject to a portion of the total reimbursement. Routine trips to and from work are not a part of a deductible travel expense.
If you use your car only for your job or business, you may deduct all miles driven or actual vehicle expenses. But if you also use the vehicle for other purposes, you can only deduct the portion used for business purposes. Every day commuting from your home to your regular workplace and back is not deductible.
There is also a consideration for expenses for primary transportation to medical care facilities. These may be treated as medical expenses if they are out-of-pocket expenses for your car. Additionally, when these expenses are fees for parking or tolls, or costs for taxis, trains, buses, or ambulances, they could be under consideration as medical expenses.
Automatic calculation of mileage reimbursement
There are options today to make managing mileage reimbursement simpler than ever. Automatic calculation of mileage reimbursement is possible with Jenji. Having the benefit of focusing on your business growth or getting back to your life is invaluable.
Expense management that synchronizes with existing data allows a worker to spend less time tackling spreadsheets and lets the users build on a platform they trust.
This solution level improves workflow and minimizes errors when tax time comes around. In addition, capturing expenses as they occur and applying the appropriate mileage rate saves businesses and employees time and money.
Jenji is the next stage of expense management. Managing your business should not boil down to time lost on mountains of papers for effective reporting. Synchronizing data with an existing IT system can be less intimidating and even more accurate than ever before. In addition, a painless setup with a robust suite of tools means fewer hours crafting expense policies. Etching out standard and custom expense types makes successful reporting predictable and reliable. In addition, expenses become highly visible with the level of reporting available, thanks to Jenji.
You would be hard-pressed to find business owners and employees without a mobile device. Now that device in the palm of your hand will allow you to scan receipts in mere seconds. Extracting information needed for a clear expense report is all in the application. Real-time reimbursement notifications let you know the days of losing a receipt or denying an expense report are over. But, simplifying expense management does not stop there. You can submit training, per diems, and paper receipts, even in the middle of the night.
Google Map integration provides precise mileage calculations that cut out the guesswork. Expenditure policies don’t require you to speculate any longer. Compliance is a breeze when you have a host of measures on your side that you can deploy with the click of a button. Businesses need to make success a planned event, and minimizing risk is a part of that. Jenji connects with users on a solution-oriented basis. The platform allows each user to have an experience that matches their accessibility needs.
There are countless reasons that more than 35,000 companies trust reporting from Jenji. So log on now to find out for yourself how complete visibility of your expenses will change how you do business.