mileage reimbursement for 1099 employees

The costs include fuel, tires, wear, and tear, etc. It covers the costs of an employee using their own car for work. A car allowance is a preset amount given over a period of time. Because any amount reimbursed in excess of the IRS standard mileage reimbursement rate for that given year must be reported as taxable income.Ī car allowance is when an employer gives an employee a set amount of money for company mileage driven with their personal vehicle. Using the standard mileage rate makes things a little simpler as for both the business and the employees. Please scroll to the bottom of this article for a link to the article with the most up-to-date IRS mileage reimbursement rates, including ones in the past. It’s not uncommon for companies to use the same per-mile amount as published by the IRS as the per-mile mileage expense tax deduction amount.Įach year the IRS updates these amounts. This per-mile amount takes into consideration the cost of fuel, wear and tear on the car (if the employee is driving their own car), and other costs associated with an employee’s company mileage expenses. Typically, miles expenses are paid back at a cents-per-mile rate under the miles reimbursement method. Therefore, reimbursement for mileage varies based on how much the employee drove. Mileage reimbursement programs are where a company pays back employees for company mileage after the employee files an expense report. Below we look at the car allowance vs mileage reimbursement program. The one you choose depends on your business needs and income tax regulations. There are two payment options to reimburse employees for company mileage expenses. Two Methods of Employee Reimbursement of Mileage

Mileage reimbursement for 1099 employees