Last year the IRS mileage rate went down slightly, despite escalating gas prices. This year the rate went up slightly, despite decreasing gas prices.
You would think, with gas prices so low, that the mileage reimbursement rate wouldn’t go up, but instead would go down, maybe even way down. But it didn’t. It went up one and a half cents per mile to 57.5 cents on January 1st, 2015.
The IRS Standard Mileage Rate is the rate provided by the IRS for mileage reimbursement for business use of a personal vehicle. In 2015, the rate is 57.5 cents per mile. The rate is a guideline based on average gas prices and average wear and tear on a vehicle (gas reimbursement is a part of this rate).
Some people want to know if they can reimburse less than the standard rate. The answer is yes. Others want to know if they can reimburse more. The answer is also yes.
By travel time, here, we mean travel during working hours for work purposes; we don’t mean travel time spent going to and from work. The time it takes us to get to work is on our own dime. The time it takes us to drive around for our employers should be on their dime (with a few exceptions – see below).
So, what types of travel occasions should employees be paid for? Allow me to clarify.
The IRS standard mileage rate is intended to cover all the costs associated with operating a vehicle for business purposes. This includes wear and tear on the car as well as gas expenses.
The IRS mileage rate has changed for 2014. Unlike in years passed, the rate has decreased slightly. In 2013 the rate was 56.5 cents per mile and for 2014 it is 56 cents.
From the IRS website:
Beginning on Jan. 1, 2014, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 56 cents per mile for business miles driven
- 23.5 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
The purpose of the IRS Standard Mileage Rate is not to impose a rate of payment by employer to employee, but to give the employee a guide for his or her deduction at tax time.
The rate offers compensation to the employee either through payment by the employer or in the form of a deduction for business related mileage on a personal vehicle.
Technically, an employer can pay any mileage rate he sees fit, whether that be over or under the IRS standard. But if he doesn’t meet the IRS standard, the employee can deduct that amount on her taxes.
The days of using paper for record keeping are quickly coming to an end. For nearly any task you can think of, there is either an online application, like a software service, or there is an Android or iPhone app to make the job easier.
Mileage Tracking is no exception.
There are some easy apps available to help employees keep track of odometer readings for their mileage records. This is great news because employees have to track their mileage if they are reimbursed by their employers for mileage or if they plan to claim tax deductions for the use of their vehicle for business purposes.