My employer started paying me mileage reimbursement of 25 cents per mile(way under average). My first reimbursement check had State & federal taxes taken out. Is this correct?

ANSWER

Expert Todd Alexander's Answer:

For 2012, the standard mileage rate is 55.5 cents per mile, so yes 25 cents is lower than allowed by the IRS.  But the bigger issue to deal with is does your employer have an accountable or non-accountable plan.  In general, if there is an accountable plan and you document business expenses to your employer, the reimbursement is not included in your salary and wages.  Also, the additional 30.5 cents per mile is deductible on Schedule A as an unreimbursed business expense.  If your employer has a non-accountable plan, it is up to you to record, document and deduct the business on your tax return.  And in this case, any additional payments made to you are taxable and included in salary and wages.

Todd Alexander, CPA

California

20 yrs experience

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