Questions on mileage and taxable income?

Question

My employer does not pay mileage but instead calculates the mileage rate X the miles, and gives this portion of our pay tax free. He deducts this amount from the gross wages until taxes are taken out. Is this legal? What is my taxable income? My paystubs don't balance. Can I claim mileage since I wasn't truly paid mileage separate from wages?

Answer 1

All taxes are to be calculated against your gross earnings before a mileage reimbursement is done. The way your boss is doing it is not legal. Your employer is risking a lot of liability from the IRS, the Department of Labor, possibly the local Department of Revenue, and possibly others.

If your milage reimbursement is coming from your employer, then a mileage report is what should be getting filled out (by you) for their records when doing a reimbursement - it's a business expense. If you are using your personal vehicle to conduct your employer's business and they are not compensating you for the mileage, you can claim it later tax-wise so long as you have kept a trip log (date, reason for travel, and mileage).

If you were being properly reimbursed for your mileage, there would be a line that shows it on your earnings statement.

Answer 2

I'm not real clear from your question just what your employer is doing. If he's calculating your pay as hours worked times hourly wage (or if not paid hourly, your salary for the pay period) PLUS mileage rate times reimbursable miles, then subtracting the mileage part when calculating taxes and paying you the wage part less taxes on that, plus the mileage amount, then it's OK - what he's essentially doing is writing one check for your paycheck plus your expenses for mileage - not the best practice, but not illegal either.

If that's what he's doing, then no, you can't claim mileage on your taxes - you're already getting reimbursed tax-free, like an expense account would be.

If he's not adding on the miles x mileage rate to your calculated pay for the period in the first place, then you're getting cheated and not getting paid what you should be, and what he's doing is NOT OK.

Answer 3

The answer will be on your W2. If Box 1 includes only the amounts paid to you after mileage expenses were deducted, then that is your gross wages and you do not deduct mileage.

If Box 1 includes the mileage expenses, then you can deduct mileage.

If he did not "reimburse" you for the federal rate of 44.5 cents a mile, you can deduct the difference.

Answer 4

Some of your questions are better answered by a tax accountant. However, whatever is your primary source of income, you can not claim mileage for. Anything else that is considered to be a second job, you can. You can also claim for mileage incurred doing voluntary work. When you meet your clients at a coffee shop, and pay, this could be a deductible business expense. Save the receipts!

Answer 5

Reimbursing you for mileage and not withholding taxes on it is legal. However, he should not be deducting the amount of the expense reimbursement from your gross wages. That, while not necessarily illegal, is not right either. What he is doing is effectively paying you less salary. What your employer is doing is reimbursing you for business expenses. Your paystubs do not balance because your gross and net paycheck includes this expense reimbursement, while your taxable wages does not. To get your taxable wages, take your gross wages and then back out the expense reimbursements.

Answer 6

they can't give you a portion of your pay tax free, that you have earned.

they need to give you the money, re-emburse you for your mileage tax free.

you need the money