Employee mileage reimbursement

[Js202137]

I have an employee who regularly uses his personal vehicle for various tasks that he doesn't want to come get our truck then drop back off. I'd like to start reimbursing his mileage, where do I enter this on our taxes, meaning section. And do I run it through our payroll program or just cut him a check once I have his supporting documents back. Thanks in advance for any help.

[CatinaT1 · Accepted solution]

You would need to create an Accountable Plan for use within your company.  Implementing an Accountable Plan is easy and allows employees to turn in expense reports for business related expenses they paid for personally or use of personal property for business use (mileage) so the business can reimburse.  

Mileage reimbursement would be an expense for the company and reported on the business return under vehicle expense.

For the employee, the reimbursement should not be processed through payroll because it is not considered income, but a reimbursement.

[Carl]

If your business does *NOT* have an accountable plan, then what you reimburse the employee gets included in box 1 of their W-2 as wages paid.

If your business does have an accountable plan, then the employee is required to submit receipts for reimbursement. The amount reimbursed is "NOT" reported to the employee on their W-2 or any other type of tax reporting document. But for the business it is a valid and deductible business expense. (Transportation expense I"m guessing?)