Understanding Business Miles vs Commuting Miles

A truth as old as time (or at least since the invention of mileage reimbursement): mileage makes the mobile worker! But not all mileage traveled by mobile employees in their personal vehicles counts towards work-related mileage for reimbursement and should be reported in IRS-compliant mileage logs. For companies that employ a large number of these workers, from jobs all over the spectrum from food delivery to home health care, it’s vital to understand the difference between business miles vs commuting miles for accurate records and reimbursement. In this article, we’ll compare the two, including the defining criteria for both, the tax implications, and how understanding the difference can ensure transparent and precise mileage reporting.

Business Miles vs Commuting Miles

Unpacking Business Miles

For mobile employees, taxable business mileage encompasses all vehicle use for work purposes, beyond that of the employee’s standard commute. This includes mobile employees using their personal vehicles to make trips to client sites, to move between multiple work locations, or to make errands for work-related purposes. For example, an employee driving from their main work office to a client’s office 30 miles away, and then to a conference center for a business meeting, is accumulating business mileage. 

A big hallmark of weighing business miles vs commuting miles is that business mileage traveled by mobile workers is tax deductible, if it meets the criteria of the IRS accountable plan. These criteria dictate that mileage is accountable (and non-taxable) if it is provably business-related, there is substantiation of this travel in the form of accurate and comprehensive mileage logs, and that if an employer pays an employee an amount in excess of what was spent or incurred, the employee must return it within a reasonable period of time. 

Decoding Commuting Miles

One way of understanding business miles vs commuting miles is that while travel between workplaces is business mileage, everyday travel to a regular workplace from the employee’s home is a commute, and thus generally not deductible. A typical example of commuting miles is an employee’s daily drive from their workplace and then back home again. While running to the store for office supplies over the course of a workday counts toward business mileage, a worker’s 20-mile daily commute remains a personal expense, and won’t qualify for deductions. 

That being said, this rule does have certain exceptions. Traveling from an employee’s home to a temporary work site or client location, for example, may be considered business mileage under IRS rules. If an employee has no regular place of work but they do regularly work in the area where they live, they may be able to deduct transportation costs between their home and a temporary place of work outside that metropolitan area. 

Taxation and Financial Implications

In the area of professional travel, logging business mileage is a key area for business owners hoping to save money in the form of tax deductions. A massive element of meeting the IRS’s standards for non-taxable mileage is meeting their guidelines for logging that mileage. IRS-compliant mileage logs must contain an up-to-date record of the destination, mileage, and business purpose of every trip taken by the employee in question. The employee must also provide this log to their employer in a reasonable time period to receive reimbursement for this travel. 

Correct mileage classification of business mileage can lead to significant savings for both the employee and their employer! Misclassification, however, such as logging commuting miles as business mileage in a travel log, could result in audit flags and potential financial or legal penalties for your organization. To ensure accuracy, companies often conduct regular audits and provide employee training focused on proper mileage documentation. 

Strategies for Precise Mileage Tracking

Because accurate mileage tracking is paramount to adhere to IRS guidelines and ensure equitable employee reimbursements, it’s equally paramount that your business do everything in its power to facilitate that accuracy! Many organizations employ advanced tools, such as digital vehicle mileage logs and automated reimbursement tracking to aid in this. Tools like mileage tracking apps provide an efficient and accurate way to record a trip’s distance, location, and its work-related purpose. 

Regular internal reviews of mileage records by supervisors and management are also critical to validate the accuracy of these logs, as well as to help catch any errors, discrepancies, or misreported mileage. Establishing clear guidelines for mileage logging and what constitutes business travel within the parameters of your organization is essential to maintain consistent and compliant mileage reports across the scope of all of your mobile employees. 

CompanyMileage Makes Business Mileage Tracking and Reimbursement a Snap

The clear distinction between business miles vs commuting miles is vital knowledge required to optimize an organization’s tax benefits, and maintain accurate financial records. Through a combination of diligent mileage tracking, employee education and training, and the right tools, companies can guarantee both legal compliance and financial efficiency. CompanyMileage will even take it one step further and provide you the tools for success! 

Our suite of mileage tracking and reimbursement software tracks and automates every step of the process, to ensure the best possible tax savings for our users. Our SureMileage software uses the starting and ending points of each trip to calculate the cost of reimbursement, relying on point-to-point calculation instead of odometer readings, which ensures accurate employee mileage tracking, uninflated by non-work-related mileage. SureMileage also gives management and supervisors full, auditable record of an employee’s trip data, with the option of flagging problematic behaviors for further analysis or setting daily per diems in the system. 

This process is a snap for employees, too! Using our SureMobile app, employees just have to take a moment to report their trip start and end point on their mobile device, and submit those trips for approval. Once submitted, the reimbursement claim is automatically moved through a customizable approval workflow. And once approved, our software easily integrates with major accounting and payroll systems, so reimbursements will be as efficient and accurate as the rest of the process. 

Understanding the difference between business miles vs commuting miles and logging that mileage accordingly may seem daunting, but it doesn’t have to be. Contact CompanyMileage today to schedule a demo and learn more! 

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