The definitive guide for mileage reimbursement

Running your own business can be expensive – to save some money that you can later re-invest, make the most out of the available write-offs and deductions. Businesses that use vehicles for work can apply for mileage reimbursement, but to do that, they have to keep a detailed mileage logbook. How to make sure you get as much mileage reimbursement as possible?

How can employees get reimbursed for mileage?

If your employees use their own cars for business travels, you’ll have to reimburse them for the fuel costs and vehicle depreciation costs. According to mileage reimbursement rules for 2022, deliveries and commuting to and from work all count as business purposes, and to receive tax deductions for mileage, each trip has to be accurately tracked.

Since most approaches to mileage reimbursement in the United States require a mileage logbook, you should always keep good track of each trip. If you don’t want to use pen and paper or Excel to track manually, you can use a mileage app to create an IRS-compliant mileage log.

3 types of mileage reimbursement: F.A.V.R., fixed car allowance, and the IRS standard mileage rate

There are three main types of mileage reimbursement available in the United States: FAVR, fixed car allowance, and the IRS standard mileage rate.

The FAVR, or Fixed and Variable Rate program allows employers to cover all vehicle-related expenses, including insurance, taxes, and depreciation. In addition, FAVR includes variable costs as well, such as gas, tires, oil, AdBlue refills, and other.

Using a fixed car allowance, employers can also pay a flat periodic rate to all employees that use vehicles, but the solution isn’t very accurate. Finally, the IRS standard mileage rate allows employers to pay a standard fee ($0.585 in 2022 for most purposes) per mile.

Tracking mileage for taxes – how to do it efficiently?

To get reimbursed for mileage, you’ll need an IRS-proof mileage log. A miles tracker app like MileageWise can help you automatically gather and sort all the relevant information using 3 automatic trip tracking modes.

With MileageWise, you don’t have to worry about the Internal Revenue Service – the app keeps a digital logbook of all your trips, generating an IRS-compliant log on demand. If you’re used to Google Maps Timeline, you’ll be able to import all your trips directly to the mileage app.

MileageWise also offers AI-based past trip recovery, reconstructing your forgotten mileage based on previous destinations and journeys. If you need additional guidance, MileageWise offers a VIP mileage logbook service that will help you prepare your logs for potential audits. You can give MileageWise a try with a 14 dial free trial with all the features available – click here to download MileageWise on App Store!

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