Wednesday, December 19, 2012


Q:  Hi Larry, I have a question about how to reimburse an employee for mileage. I just read what the deduction is but I need to know what the rate is for a business to pay back an employee for auto expenses they incur running errands for the business. I am assuming it is an amount per mile and I have asked them to keep a log.

A: You are correct that they should turn in a log (diary) of their miles.  By your question I am assuming that these are routine trips around town such as to the bank etc.  If this is true instead of a daily log the employee can determine the routine miles for the trip and then if they can somehow document the number of trips you can just multiply to determine total business miles.  Having said that in my opinion the IRS likes a detailed log but the other method works.

The mileage rate is 55.5 cents for 2012 and 56.5 cents for 2013.  The amount given to the employee is not added to the W-2 and you do not have to give the employee a 1099.  It is deductible to you and not income to the employee.