Many businesses choose to reimburse their mobile employees for the use of their personal vehicles while traveling as part of their daily work-related duties. However, not all mileage should count towards reimbursement. Despite what employees wish to be true, the IRS does not consider commutes between an employee’s home and place of work eligible for mileage reimbursement. If commuting mileage is getting factored into employees’ reimbursement payments, you may run into some issues.
This may not seem like a major issue, but if you’ve been unknowingly reimbursing for commutes, those payments are actually considered to be wages by the IRS. That means they are subject to payroll taxes which you’ll be required to pay.
Unfortunately, many mileage tracking apps don’t allow users to differentiate between work-related mileage and non-reimbursable travel such as commuting miles. Just how much are these mileage tracking apps costing you?
The Cost of Reimbursing an Average Commute on Your Company
How much could erroneously logging commuter mileage for reimbursement cost your business? Let’s do some math, shall we?
According to a 2023 report by Zippia, the average commute in the United States is 41 miles (both to and from the workplace). Let’s say that an employee with this average commute was logging their commuting miles for reimbursement in a mileage tracking app. If an employee were to drive this commute every day, five days a week, and you reimburse them at the current standard mileage rate of 67 cents per mile, that’s an extra $549.40, for just a single employee in a single month.
For a fleet of employees, which could number in the hundreds, those costs are going to add up quickly. If you have 200 mobile employees all logging their commuting miles, for instance, in a given month you’re paying out around $109,880 of reimbursements that are not tax deductible.
Discover a Better Way to Save
If those numbers made your head spin, you aren’t alone. Many mileage tracking apps used by businesses to record mileage for reimbursement opt to use GPS to track an employee’s movements. With this method, there’s no easy way to determine which recorded mileage is for their commutes or other non-reimbursable travel, and which miles are actually work-related.
If you have employees keep a manual mileage log, most of them probably aren’t purposely including their commuting mileage in reimbursement claims. It’s just a matter of not understanding what is and isn’t allowable. Commuting to and from the workplace is technically work-related, it’s just not eligible for reimbursement by the IRS because the agency considers the commute to be a regular part of any employee’s day, separate from using their personal vehicle to travel while actively on the clock.
This, of course, raises the question: How can your business best ensure that commuting miles aren’t erroneously reimbursed and the IRS doesn’t penalize you for it later?
Streamline Mileage Reimbursement Management With CompanyMileage
Here’s a solution: Have you considered using CompanyMileage? Our suite of mileage reimbursement software solutions are designed specifically to make mileage tracking, submission and reimbursement as quick, efficient and as accurate as possible.
SureMileage, our mileage tracking software, eliminates inflated mileage counts and the need to calculate odometer readings by using a unique method called point-to-point calculation. Employees simply enter the start and end points of each work-related trip, and SureMileage determines the best route between those two points, and calculates mileage for reimbursement from there!
Using SureMobile, our mileage logging mobile app, employees can record mileage by quickly and easily logging their start and end points right from their phones. At the end of the day, they just need to take a couple of minutes to organize their trips, submit any relevant photos and receipts, and hit submit.
If commuting miles are included in an employee’s trips, we take care of it. Our solution automatically tracks the distance from an employee home to their office (if the employee has a home office we have solutions for this, too). When a trip is posted to or from their home, we automatically deduct that mileage.
Once submitted, reimbursement claims are moved through an automatic, customizable workflow for manager approval. Our software even integrates with all major accounting and payroll systems, to ensure that every step of the reimbursement process is as painless and efficient as possible.
CompanyMileage simplifies the entire mileage reimbursement process, from mileage tracking to review and approval. To learn more about how our solution saves our customers up to 30% on mileage reimbursement expenses, schedule a demo today.