Anyone an expert on IRS mileage compensation rules?
Q.Is anyone an expert in how mileage is supposed to be computed? I work for a company that has an office presence in Maple Grove. I work at client locations exclusively and only travel to our office for meetings (maybe 3-4 per year) or for some physical task (pick up random part mis-shipped or fill out some paper form). I don't have an office, desk, phone or any other physical presence in the office. We get paid the IRS rate for mileage, but were recently asked to compute mileage for places where we "drove past" (in my case, on 94 from SW Mpls to Rogers) the office. We had been getting paid mileage based on actual driving from our homes. Of course this is a huge ripoff as far as I'm concerned since it will mean eating 60+% of the cost of my travel "past" the office (which was left highly vague -- our office is a good 2-3 miles off the freeway). I smell an accountant just trying to cut reimbursement costs, but maybe its like every other stupid thing and is totally biased towards employers. I could swear when I have talked to someone else with some expertise, you are not bound by the physical place of business as a mileage calculator if you don't have a physical presence. Anyone know? Anyone know of a good web site where its explained in non-IRS legalese?
A.In the US Master Tax guide, it is not defined. It just says that "business miles" are reimbursed at the standard rate of xxxx (it changes all of the time). Most of the companies I have worked for deduct for the "commute". If you are working out of your home, it seems a little unreasonable for them to deduct the mileage between your home and the office if you never go there and it is farther than where your appointments are. I have heard of cases where a salesperson working far from the office would try to say that their first and last call just happened to be right down the Street from their house every day, just so they could inflate their reimbursement. I don't believe your employer has to reimburse everything and can create a "commute" number but the IRS website says you will be able to deduct it on your personal return. "Although commuting costs are not deductible, some local transportation expenses are. Deductible local transportation expenses include the ordinary and necessary expenses of going from one workplace (away from the residence) to another. If you have an office in your home that you use as your principal place of business for your employer, you may deduct the cost of traveling between your home office and work places associated with your employment." (http://www.irs.gov/taxtopics/tc514.html) There are 2 sets of rules...the rules that you negotiate with your company, and the IRS rules. The IRS has a business establish a "point of presence", which is their normal home office location. Miles commuting back and forth to work are not deductible. Miles from the home off to a client site and back are deductible. Where it gets tricky is when you go from home right to the customer site. What you are supposed to do is record the total miles of the trip, then subtract off the round trip miles to work. So, if it is 50 miles from home to client and back, and it is 12 miles form home to work and back, you can deduct for 38 miles. Those are tax rules. A business can choose to reimburse you in any manner that they wish. They can choose to reimburse for all 50 miles in the above example, but they would still only be able to claim 38 miles on their taxes. As a result, many businesses try to avoid keeping two sets of mileage books, so they are adopting the IRS method for employees and contractors.
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