"Write it on the log at the end of the pay period and they compensate with separate check apart from hourly checks."
OK, that's either a misunderstanding or illegal.
Your main job is as a W-2 employee? They can't legally also pay you as an independent contractor. All compensation from working must be included as taxable wages on your W-2. Also, as a W-2 employee, you are not allowed to deduct mileage expenses on your tax return.
Accountable and non-accountable plans for mileage reimbursement are defined in publication 463 that I linked to earlier. An accountable plan is where you prove (account for) your mileage claim with some kind of reliable record.
As a W-2 employee, your company can choose whether or not, and how, to reimburse your mileage. They are not required to by law (although it might be in your contract or a company policy). They can pay any amount they want. This is how employee reimbursements are supposed to be handled by the company:
| If the company has an accountable plan and they pay less than the IRS standard rate |
The reimbursement is not taxable to you |
You can not take a tax deduction for the difference between the company reimbursement and the IRS rate |
| If the company has an accountable plan and they pay equal to the IRS standard rate |
The reimbursement is not taxable to you |
You have been reimbursed, no further action is needed |
| If the company has an accountable plan and they pay more to the IRS standard rate |
The excess reimbursement must be added to your W-2 wages |
You can't take any deductions |
| If the company has a non-accountable plan and they pay any amount for mileage |
the entire mileage reimbursement must be included in your W-2 wages |
You can't take any deductions |
It is up to the company to determine if they have an accountable or non-accountable plan.
Your reimbursement should never be reported on a 1099-MISC or 1099-NEC form. If they follow the rules to make it non-taxable, it is not reported on any tax form. If they follow the rules to make it taxable, it must be included in your W-2 wages and is subject to withholding of federal, state, social security and medicare taxes.
