Today TaxMama hears from Lynnette in Brooklyn who wants to know, “If an employer pays mileage – is that for the use of the car? Or does it cover gas as well?”
Hi Lynette.
That’s a good question.
Typically, when an employer pays you IRS’s mileage rate, that includes the use of the car, gasoline, repairs, insurance, car washes, even depreciation.
If they pay you less than the IRS rate, then it may not include the cost of everything.
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So, when you’re doing a lot of driving, thousands of miles, keep copies of your mileage reimbursement reports and deduct the difference on your tax return, if you can.
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Use Form 2106, Employee Business Expenses.
Of course, your own actual costs may be much higher than the amount in IRS’s rate. So if you track your actual expenses for those costs, you may end up with a sizeable deduction using Form 2106. Just be sure to deduct the reimbursements you’ve received.
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For more information, read IRS Publication 463 (2006), Travel, Entertainment, Gift, and Car Expenses
https://www.irs.gov/publications/p463/index.html
And remember, you can find answers to all kinds of questions about employee reimbursements, and other tax issues, free. Where? Where else? At TaxMama.com
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- IRS Publication 463 :: Travel, Entertainment, Gift, and Car Expenses
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