Mileage Reimbursements: Your Handbook to Manage Business Travel


March 5th, 2019 Travel Management  

Mileage reimbursements or the mileage allowance for employees vary a lot from company to company. There are no federal laws requiring companies to pay employees for driving their personal vehicles, but there are some US states that do have laws about this.

Establishing a clear policy for handling employee mileage reimbursements is an essential financial strategy. Employees should know what types of travel they can claim a mileage allowance for and how much they will be compensated.

The IRS mileage reimbursement rates for 2019

Every year, the IRS decides on a standard mileage reimbursement rate calculated using an annual study of the fixed and variable costs of operating an automobile, like depreciation, insurance, repairs, maintenance, gas, and oil. Also,  IRS Mileage reimbursements rates for employees are tax-free.

As of January 1, 2019, the IRS mileage reimbursement rates for cars, vans, pickups, and panel trucks are:

  • 58 cents per mile driven for business use
  • 20 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

Businesses are not required to follow these rates because the federal rates are mere guidelines. If your business is located in an area where gas and tolls are expensive, you can hike up your rate for the mileage allowance deduction. The amount that exceeds the federal standard become taxable for the employee though and has to be reflected in the tax return.

How to create an automated mileage reimbursement form in 15 minutes

A workflow automation tool like Kissflow can help you design, map, and implement the mileage reimbursement approval workflow with ease. You can use drag-and-drop functionalities to create workflows and to streamline your expense approvals. Here’s how you do it in Kissflow:

1. Create your form

The first step to designing a mileage allowance payment workflow starts with creating the forms for capturing the expenses. You can create a mileage reimbursement form from scratch, or use the pre-installed app in Kissflow. Employees can use this form to submit their car and gas mileage allowance expenses.

The form should create a unique id and capture basic information about the employee like name and department. Also, the date when the expense occurred, its category, and the amount spent, should also be captured. There should be an option to attach receipts for parking, gas, and tolls.

define mileage reimbursement app fields

2. Design the workflow

Once the form is ready, you need to design the sequential path of tasks that need to be completed. Depending on your requirements, an employee mileage allowance claim can be approved by the direct manager, the travel desk, or the finance team.

You can also have multiple levels of approvals. If you’re looking to automate approvals based on predefined criteria, this is the stage where you do it.
design the mileage reimbursement workflow

3. Set permissions

Once the workflow is ready, you can assign stakeholders and set permissions. Roles and responsibilities are assigned to individuals based on their tasks in the finance workflow. You can even provide role-based access to hide sensitive information.
optimize the mileage reimbursement app

4. Implement the process

After everything is set, you can publish the workflow. Employees can initiate instances of the workflow and submit their gas mileage expenses for managers approval.
implement the mileage reimbursement app

5. Improve the workflow

Once the system has been implemented and has run for a while, it collects enough data to give you insights into how these processes can be made faster and more efficient. You can find the time taken to submit reports, the average approval time, and other such information to improve the workflow’s efficiency.

improvise the mileage reimbursement app

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How Does Mileage Reimbursement Work?

There are three ways businesses can handle employee mileage reimbursement.

Actual expenses

Employees track the actual expenses incurred by them during the business trip, like gas, parking, and tolls. But, this can be tedious and doesn’t account for depreciation of the vehicle.

Fixed allowance

Employers provide a lump sum every month to cover the cost of fuel, maintenance, tires, and more. However, this is not tax deductible for the employee and can be pretty inefficient as there is no way to monitor the actual usage of the vehicle for personal and business trips.

Mileage allowance

Most companies rely on mileage logging for reimbursements. Whenever employees use their personal vehicles for work, they keep track of the distance covered. Employees submit their travel expenses along with the start and end odometer readings to the finance department. This does not include personal trips along the way but only the business miles driven purposes.

List of expenses covered as a mileage allowance

Employees can be reimbursed for the miles driven for business purposes and not for personal detours along the way. A business expense should be both ordinary and necessary, according to the IRS.

Here are some examples of valid gas mileage reimbursement claims that come under the accountable plan:

  • Temporary jobs – Travel expenses incurred when traveling for temporary work (that’s expected to last less than a year)
  • Client visits – Meeting a customer off-site
  • Errands – When you drive to get supplies for the business
  • Conventions – Driving to tradeshows, workshops that benefit your business
  • Airports – When you use your car to drive to the airport before an international trip

Let’s say Jessica, a salesperson in your company, uses her car to meet with a client 50 miles from your office. She meets her friend who lives ten miles from the client’s place. She returns to the office, having driven a total of 120 miles, of which only 100 miles are for business duties. She gets reimbursed $58 ($0.58 x 100 miles).

⋙ You’re just a click away from creating your own customizable Mileage Reimbursement Form in just 15 Minutes!

The Best Way to Handle Mileage Reimbursements

Workflow automation software like KiSSFLOW can help streamline the employee mileage reimbursement process. With simple drag-and-drop functionalities, you can create a custom form to make entering mileage reimbursements easy. You can set up the form to automatically calculate the mileage based on odometer readers.

After submitting the form, you can create your own workflow to make sure everyone who needs to sign off and approve the form gets to see it. Having an audit trail also helps with record keeping and tax-related activity.

If you’re looking for mileage reimbursement software, take KiSSFLOW for a spin. Start your free 14-day trial today.

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