Is it legal to tax a mileage reimbursement payment?

Question

I get a lump sump payment from my employer that is meant to cover mileage and labor pay for emergency service calls I perform. The mileage varies on a case-by-case basis, but the payment and tax withheld are always the same amounts. The call detail report I submit for the payment makes no mention of or provision to record mileage amounts. I also wonder how I should handle this on my income tax.

Answer 1

yes

Answer 2

This is just a guess here.

Since the payment is a lump sum and not based upon actual mileage, I would say that it is considered taxable wages. Therefore, you will need to claim the actual mileage on form 2106 to see if you have enough to include in your itemized deductions since the deduction is limited to anything over 2% of your adjusted gross income.

Answer 3

This sounds like a non-accountable reimbursement plan, meaning it is taxable.

The lump sum for mileage will be included in taxable income, and then you deduct your mileage expenses on Schedule A, attaching Form 2106 as required.

Answer 4

If this payment from your employer does not require that you pay back any amounts not used nor do they reimburse you more if you exceed the payment amount for mileage and labor pay, then yup, Form 2106 is what you need and you need to exceed 2% of AGI and itemize to deduct any of this from your income.

Ouch.