At my job I drive my own vehicle to customer locations. My employer reimburses me $0.10 per mile for this travel. This is substantially less than the Federal Mileage Rate, $0.36/mile. He claims that since I am classified as a Statutory Employee, I can file this on my taxes and have the difference ($0.26/mile) refunded by the Feds. I’ve been told (without any cites) that this isn’t legal and my employer really should be paying the full rate. Can anyone point me to the section of the tax code that covers this?
I don’t know the relevant code, but I can tell you that the IRS doesn’t “refund” you anything. You are allowed to deduct the $0.36 per mile from your taxes. It’s not that they give you back $0.36 per mile.
Whether your employer pays yo 0, 10, 25, 36 or 47 cents/mile what you are allowed claim as an expense deductible from your income is 36 cents/mile. What the feds say you can deduct does not mean your employer has any obligation to pay you that. That is between you and your employer and taxes are between you and Uncle Sam. Different people, different hats.
You can’t claim the deduction on your taxes for any portion that is reimbursed. So, when I worked for a corporation that reimbursed me (the whole amount), I had no deduction, and the company claimed it as a business expense.
You are totally right and my post was not clear.
I hope you drive a lot.
The milage reimbursement is subject to the “2% floor” in Adjusted Gross Income. Meaning your deduction has to be greater than 2% of your AGI and you only get to deduct the amount that is greater than the 2%.
At the $0.26/mile you quoted, that is a good chunck of behind-the-wheel time.
For a person with an Adjusted Gross Income of $50K, reaching 2% at 36¢/mi. only takes 2778 miles in a year. The company doesn’t need to meet that requirement for it to be a deductible expense, and getting real dollars is better than deducting the same amount of dollars. So, it is preferable to have the company reimburse you rather than take the deduction.
In my previously mentioned employment, my logged business miles, which were not great, but it’s not difficult in a city like Houston to run up 120 miles in a day, ran about $3K in reimbursements a year. And driving was not my main occupation.