Given the following:

I am an hourly wage employee of a company. At the beginning of each calendar year, I get a W-2 showing my wages earned and taxes withheld for the previous year.

The company pays field staff for mileage at a rate of $0.50 per mile but only if daily mileage exceeds 35 miles and for miles above the base 35 miles. The mileage paid is based on the shortest route, according to Google Maps, between my home and the job site.

The IRS establishes mileage reimbursement rates for business use of a personal vehicle. The rates I'm talking about are $0.54 / mile for 2016 and $0.535 / mile for 2017.

In the past, my mileage reimbursement rate was based on the IRS guideline. Some years the rate went up, other years it went down. Despite fluctuating, the rate was always tied to the IRS allowance, never fixed at a rate well below the IRS allowance.

In some cases, the mileage reimbursement rate I was paid exceeded the IRS allowance by as much as $0.05 - $0.10 / mile and I vaguely remember the amount above the IRS allowance being taxed as income.

As a wage employee, do I have a reasonable expectation of getting any mileage reimbursement from my employer? Should the rate be tied to the IRS rate? Or is the current arrangement actually okay because I really have no claim to mileage reimbursement from the employer? Or is it possible my employer is taking advantage of field staff; pay field staff $0.04 / mile under the IRS rate but use the IRS rate on company tax forms and "pocket the difference"? (Yes, I know no actually money is changing hands)

  • 3
    Business use of a personal vehicle does not include commuting. – quid Apr 11 '17 at 18:58
  • Also, the company does not deduct your mileage so there is no profit for them. They will record the same expense regardless of what the IRS rate is. – D Stanley Apr 11 '17 at 19:21
  • @DStanley - What number shows up on the company's tax forms, the number of miles or the dollars paid for reimbursement? There is a difference and, with the number of employees we're talking about, the difference is rather large. It's been awhile since I filed a corporate return so I don't remember the details of the "company side" of this discussion. That and accountants helped take care of those details. – George Apr 11 '17 at 19:48
  • To be fair, I don't prepare corporate taxes either, but from what I have seen, they just report the expense, not how that calculated the expense. If they are reimbursing one amount but reporting another I'd think that would be a problem. In any case, @quid is correct that you can't get reimbursed for miles to/from your office - only miles in excess of that amount (e.g. from your office to a field site) – D Stanley Apr 11 '17 at 19:49
  • @DStanley - The "commute" might be the first 35 miles that field staff are not reimbursed. I suspect at some point, many years ago, in the company's infancy someone calculated an "average" and that became the basis for the policy. And that raises additional questions, like if commuting mileage is not reimbursable should that payment be taxed? – George Apr 11 '17 at 20:02

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