Vehicle reimbursement is when a driver receives reimbursement for driving a personal vehicle for business purposes. The reimbursement is based on the number of miles driven and is calculated using federal mileage reimbursement rates. Employees must document their mileage and may receive a separate check or reimbursement included in their paycheck. Other personal vehicles, such as airplanes or motorcycles, may also be reimbursed with special permission. The IRS offers special rates for individuals using personal vehicles for business, moving, charitable, or medical purposes, which can be claimed as a deductible on personal taxes.
Vehicle reimbursement refers to an individual driver receiving reimbursement for the cost of driving a personal vehicle while conducting business on behalf of a company or government agency. Reimbursement is generally calculated based on the number of miles an employee or agent drives to and from specific work locations for the purpose of meeting clients, facilitating special programs, or any number of other work-related tasks. Anytime a vehicle reimbursement program is made available to help employees with travel-related expenses, the exact amount offered per mile driven prior to taking a trip is understood.
To receive a vehicle reimbursement for mileage driven, employees are required to document initial mileage readings and endpoint readings so that mileage used during the course of the job is accurately calculated. After submitting the mileage amounts using the appropriate reporting forms, employees are generally issued a separate check for the mileage used or a reimbursement for the mileage may be included in an employee’s future paycheck. Mileage amounts are also generally established based on federal mileage reimbursement calculations.
A vehicle reimbursement plan helps offset the cost of fuel and maintenance for employees who must drive their own vehicles during the course of work. This is particularly useful for employees who spend a large amount of time driving to multiple job sites or performing other field tasks on behalf of a business or government agency. The amounts offered for reimbursement may vary from company to company, but within an organization, each employee is generally reimbursed at the same rate as others within the company for mileage driven in a personal vehicle.
Vehicle reimbursement is not only offered for automobile travel, but many agencies also reimburse employees for the use of other personal vehicles. Some of these vehicles include airplanes or motorcycles. However, special permission to use other personal vehicles must be granted prior to use, if reimbursement for the vehicle is expected.
In some cases, another agency other than a direct employer may offer another type of vehicle reimbursement. In the United States, the Internal Revenue Service (IRS) has calculated special rates for people who use a private vehicle for business purposes, as well as for moving to do business. Rates are also available for individuals using personal vehicles for select charitable or medical purposes. The amount of each of these fees is different, but each is calculated based on the most recent research that reflects transportation costs. Once an individual calculates the total mileage used for these activities, the IRS allows the total to be claimed as a deductible when reporting personal taxes.
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