How to record business miles, set a reimbursement policy, use the IRS standard mileage rate under an accountable plan, follow state reimbursement laws and avoid common errors.
When employees drive their own cars for work, such as cleaners going between homes, home care aides visiting clients, technicians traveling to jobs or sales staff visiting customers, the costs add up quickly. Without clear tracking, employers either overpay on guesses or underpay and risk wage claims, and employees feel shortchanged. Good records also support tax treatment and help you understand the true cost of serving each client or site.
| Trip | Usually business mileage? |
|---|---|
| Home to regular workplace and back (normal commute) | No |
| Between two work sites or clients during the day | Yes |
| Regular workplace to a client and back | Yes |
| To pick up supplies or parts for work | Yes |
| To a temporary work location (rules vary; check IRS guidance) | Often yes |
| Personal errands during the day | No |
Write your definitions into a policy so employees and managers apply them consistently. If the first trip of the day goes to a client instead of the usual workplace, decide how you handle it, for example by reimbursing only miles beyond the employee’s normal commute.
Our mileage report template covers these fields. Logs should be submitted regularly, for example every pay period, not reconstructed months later.
| Method | How it works | Considerations |
|---|---|---|
| IRS standard mileage rate | Pay a set amount per business mile; the IRS publishes the rate each year | Simple and widely used; generally non-taxable under an accountable plan |
| Actual expenses | Reimburse a share of fuel, maintenance, insurance and depreciation | Accurate but administratively heavy |
| Fixed and variable rate (FAVR) | Combines a fixed monthly allowance with a per-mile amount, under specific IRS rules | Used by larger fleets; complex requirements |
| Flat car allowance | A fixed monthly amount regardless of miles | Usually taxable as wages unless substantiated |
Check the current IRS standard mileage rate on IRS.gov each January; it changes periodically.
Reimbursements are generally excluded from an employee’s taxable wages when they are paid under an accountable plan. In broad terms, that means the expenses have a business connection, employees substantiate them within a reasonable time (the mileage log) and any excess advance is returned. Reimbursements at or below the IRS standard rate with proper logs commonly meet these rules. Payments that do not meet them, such as a flat allowance with no records, are treated as taxable wages. Confirm details with your accountant or payroll provider. See supplemental wages.
Our expense reimbursement policy template can be adapted to include mileage.
A home care aide drives between four clients each day. Her normal commute is excluded. Using an illustrative rate of $0.70 per mile:
| Day | Business miles | Reimbursement |
|---|---|---|
| Monday | 28 | $19.60 |
| Tuesday | 34 | $23.80 |
| Wednesday | 22 | $15.40 |
| Thursday | 31 | $21.70 |
| Friday | 25 | $17.50 |
| Total | 140 | $98.00 |
Use the actual current IRS rate or your policy rate in practice.
Most employees report mileage honestly, but errors are common: a trip logged twice, a commute included by mistake or distances rounded up generously. A light audit process keeps claims accurate without creating distrust. Each period, have managers review logs for unusual totals compared with the employee’s schedule and client list. Periodically compare a sample of claimed trips with mapping distances between the recorded locations. Where differences appear, talk to the employee first; often there is a simple explanation, such as a detour for supplies. Apply the same checks to everyone and document the process in your policy, so audits are seen as routine rather than personal.
Manual logs are easy to get wrong. Apps that record locations at clock-in or during work can make mileage claims easier to check, and some calculate distances automatically. Be transparent with employees about what location data is collected, when and why, and follow any state privacy or notice requirements. See GPS time clock apps.
EZTime records GPS-stamped clock-ins at each site from the mobile app, which helps you confirm where employees worked and check mileage claims. Employees can submit expenses with receipt photos through expense management, and managers approve them alongside timecards. EZTime does not calculate tax treatment; confirm that with your payroll provider.
Not under federal law in general, but costs cannot reduce pay below minimum wage, and states such as California and Illinois require reimbursement of necessary expenses.
Generally no. Normal commuting between home and the regular workplace is personal.
Not when paid under an accountable plan with proper records, at or below the IRS standard rate. Otherwise it may be taxable wages.
Date, start and destination, business purpose and miles for each trip.
A per-mile rate the IRS publishes each year for business use of a vehicle. Check IRS.gov for the current rate.
For non-exempt employees, generally yes. It is working time, separate from mileage reimbursement.
Field staff clock in from the EZTime app with a GPS stamp, and geofencing can limit clock-ins to approved locations.