Can a company reimburse its employees with a mileage rate which is lower than the standard IRS mileage rate for their use of their personal cars on business trips?

YES                                                                                                                      

The IRS issues the maximum rate allowed for reimbursement, whether or not a company adheres to that rate is the company’s decision. There could be three situations:

1. An employer has a lower rate than the IRS.

What does that mean for you?

• You are not getting “jipped;” but you should claim the difference as an expense.  

2. An employer has the same rate as the IRS.

What does that mean for you?

• Most employers should ask you to keep records for the company’s tax purposes.

3. An employer has a higher rate than the IRS.

What does that mean for you?

• You should claim the difference as income. In addition to keeping records for tax purposes.

The answers above should also pertain to the Canadian Revenue Agency for those Canadian readers.

*If you have any questions or concerns about mileage reimbursement rates please contact your company financial administrator, the IRS, or the CRA. Quino Solutions is not responsible for the reimbursement of any mileage expenses.