The best practice for mileage reimbursement in 2023 is to continue to follow the trend of reimbursing employees for mileage in accordance with IRS guidelines.
This will ensure that employees receive the most accurate and fair reimbursement for their travel expenses, while also complying with current tax laws. The mileage reimbursement app will remain the most popular method of getting mileage reimbursement in 2023.
How do Employees get reimbursed for Mileage?
Employees are often reimbursed for mileage when they use their personal vehicles to commute to work. Employees receive mileage reimbursement in different ways.
- One way is for the company to set up a mileage reimbursement policy and include it as part of the employee’s compensation package.
- Another way is for the company to contract with a mileage reimbursement service to reimburse their employees for mileage at a fixed mileage rate.
- Many times, employees can choose to receive reimbursement through their paycheck, their mileage bonus, or both.
The 3 Methods of Mileage Reimbursement
Fixed Car Allowance
The fixed car allowance is a method of mileage reimbursement in which an employee is given a set amount of money per month to cover the cost of driving their personal vehicle for work purposes. This allowance is not based on actual expenses, but rather is a predetermined amount that is intended to cover the expected costs of driving. Fixed car allowances are often used in conjunction with other forms of travel reimbursement, such as for public transportation or parking.
IRS Standard Mileage Rate
For the period July 1 to December 31, 2022, the Internal Revenue Service (IRS) has changed the standard mileage rate for business use from 58.5 cents per mile to 62.5 cents per mile. The rate for medical aid and to move active-duty members of the Armed Forces has been changed from 18 cents per mile to 22 cents per mile. The standard mileage rate for service of charitable organizations, however, remains the same at 14 cents per mile.
F.A.V.R.
F.A.V.R. (fixed and variable costs) is a method of mileage reimbursement that is used by some companies. This method reimburses employees based on the fixed and variable costs of operating a vehicle. The fixed costs include items such as insurance, registration, and maintenance. The variable costs include items such as fuel and oil. This method of reimbursement can be beneficial for employees who have to travel a lot for work, as it can help to offset the cost of operating a vehicle.
How to Track Mileage
If you’re using your car for business purposes, you’ll want to make sure that you’re keeping track of your mileage so that you can deduct it from your taxes. You can either keep a mileage log or use a mileage tracking app.
If you’re using a mileage log, you’ll want to make sure that you’re recording your starting and ending odometer readings for each trip, as well as the purpose of the trip. You can use a miles app to automatically track your mileage, which can be helpful if you’re forgetful.
MileageWise is the best mileage tracker app that automatically tracks your business miles. This mileage app will save you a lot of money and your valuable time to record your mileage, as it has an in-built editor and three auto-tracking methods that create an accurate IRS-compliant mileage log for you. You can download it on Google Play.
