$/mile as a work-related expense. IRS reimbursement?

December 1, 2006 4:08 PM

You are an employee of a non-profit organization. You drive a lot. Your non-profit organization re-imburses you 13c per mile--no it's not a lot, but we all must suffer for the cause. But something you hear bothers you.

You know that the standard IRS-set rate is 40.5c per mile of work-related driving.
But then you hear that this actually means that an organization will get reimbursed 40.5 per mile of work-related driving expenses.

Is this true? Or is it just that the organization can deduct the miles you've driven? Why is it so hard for you to understand taxes?

posted by lockse to Work & Money (12 answers total)

As far as I know, the mileage reimbursement from the IRS is for miles driven and it applies to you, not the organization, regardless of its profit status. So I keep track of my miles for my job and I can claim them as unreimbursed business expenses if my company does not reimburse me. People who volunteer are also allowed to take this deduction. Check with an accountant. I think your info is a little off...
posted by FergieBelle at 4:13 PM on December 1, 2006

Your organization is not being reimbursed anything by the IRS for your milage. However, they're giving you the wrong reimbursement amount - our tax guy is very firm that the 13c per mile is only mileage you can deduct as a volunteer (volunteer driver for Meals on Wheels, for example). If you work for the nonproft (ie: are paid by them for the work you do), then they should (according to all the tax advice I've ever gotten) reimburse you at the standard IRS rate, not the other rate.

But, of course, you should contact the IRS to be sure.
posted by anastasiav at 4:14 PM on December 1, 2006

They can only declare what they pay you as a deduction, not the actual miles multiplied by the federal rate. I don't know about them deciding to reimburse you based on volunteer vs. employee status.

You can deduct the difference between what they reimburse and the full allowable expense on your taxes though. You would do this on a Form 2106, which flows through to the Schedule A (Itemized Expenses). You can also go back up to 3 years and file a 1040X to fix old returns.
posted by blackkar at 4:16 PM on December 1, 2006

I can confirm what blackkar says. I get reimbursed 38.5 cents/mile, so when I do my taxes, I deduct 2 cents/mile.
posted by nekton at 4:32 PM on December 1, 2006

Nekton, maybe time for a chat with your accounting department. The current (2006) mileage rate is actually 44.5 cents per gallon, going up to 48.5 cents in 2007.

My understanding of non-profit mileage reimbursement is the same as that put forth by anastasiav -- the non-profit reimbursement (which is actually 14 cents in 2006 -- see first link above) is for a deduction taken while doing volunteer work, not paid work for a nonprofit organization.
posted by Doofus Magoo at 4:46 PM on December 1, 2006

As it was explained to me the number (45 cents we'll say...) is what the IRS lets you claim on your taxes per mile for business related travel. Think "independent contractor." It has nothing to do with what an employer, may they be a non-profit or not, might reimburse you for business travel. Businesses are not required by the IRS to reimburse you at all, and they are not required to reimburse you a specific amount. To save arguments with employees, many businesses just go with what the IRS says a mile is worth and reimburse the employee the 45 cents a mile. Many employees confuse this and think that the IRS says they should be reimbursed 45 cents a mile. However this "agreement" upon 45 cents is just to make things easier, and has nothing to do with IRS regulations. If they wanted to, they could reimburse you a dollar a mile or tell you to go find another job if you wouldn't deliver something for free.
posted by pwb503 at 6:30 PM on December 1, 2006

Moreover, these are deductions being claimed, not money being saved. Similar, but ultimately quite different.
posted by frogan at 7:09 PM on December 1, 2006

I worked at 2 non-profits and got the IRS standard.
posted by k8t at 7:32 PM on December 1, 2006

Your non-profit employer doesn't have profits, so tax deductions are not an issue. They're just being cheap. You can deduct the difference between what they reimburse you and what the IRS allows, if you itemize.
posted by theora55 at 8:45 PM on December 1, 2006

Let's see, from Denver to Aspen is 159 miles. Based on the difference between 13 cents/mile and 45 cents/mile that means you're out about 50 bucks each way. Assuming you're driving your own car to Aspen, that is.
posted by alms at 9:17 PM on December 1, 2006

I work for a nonprofit and get the IRS standard as well.
posted by SirStan at 9:24 PM on December 1, 2006

Best answer: The IRS rate is what you are allowed to claim as a business expense. It has nothing to do with what a company might, or might not, reimburse you for use of your vehicle.

However, for convenience, often companies set their reimbursement rates at equal to the IRS rate. Thus, you end up not being able to claim anything on YOUR taxes (you could have claimed 44.5 cents per mile, but the company reimbursed you 44.5 cents per mile, so you can't claim anything), and the company ends up being able to claim it all on THEIR taxes as THEIR business expense. Convenient.

In the situation described: the employer can claim the amount they paid as a business expense. The employee can claim 31.5 cents per mile (44.5 - 13) as an unreimbursed business expense.

These are all deductions - they reduce the amount of money that you'll pay taxes on. It's not an IRS reimbursement or anything of that sort.

The employee can, and perhaps should, agitate for a higher reimbursement rate from his employer, but that is neither here nor there - it's a personal matter between the employee and the employer. The IRS says you incur about 44.5 cents per mile of expenses by driving a car - gas, tires, repairs, depreciation, insurance, etc. So really, you're donating 31.5 cents per mile to your employer, and if you subtract that from your probably-pretty-small salary, that might be rather annoying.
posted by jellicle at 9:32 PM on December 1, 2006