Job pays $.60/mile as reimbursement, do I need to pay taxes for this?

[dant74]

This is a government job. They pay full amount no taxes taken out. And I get between 400-700 miles a week but the payments are for individual days so if I claim on Monday 100 miles at  .60/mile I'm getting $60 for that Monday. And if I do 175 miles it is $105 just for that day. And the pay is just that amount even though I claim maybe up to 700 or more miles a week

[xmasbaby0]

Sorry---W-2 employees cannot deduct job-related expenses on a federal return.  Job-related expenses were eliminated as a federal deduction for W-2 employees by the tax laws that changed for 2018 and beyond.  Your state tax laws might be different in AL, AR, CA, HI, MN, NY or PA.

If you live in a state that lets you deduct job-related expenses, the information will flow from your federal return  to the state return, so enter it in Federal>Deductions and Credits>Employment Expenses>Job-Related Expenses

https://ttlc.intuit.com/questions/4482873-which-federal-tax-deductions-have-been-suspended-by-tax-re...

[Mike9241]

if you are saying no taxes are taken out of your paycheck (They pay full amount no taxes taken out).  in this case the employer is treating you as an independent contractor. you will file a schedule C where you can deduct your actual vehicle expenses net of the reimbursement.  

if you were an employee you would have gotten a w-2. in a non accountable plan the reimbursement should be included in you W-2 wages box 1 for which you get no offsetting deduction whereas under an accountable plan it would not be included on the w-2 and you don't need to report it.

[NCperson]

@dant74 -  if your employer is reimbursing you for the costs related to your personal automobile (gas, depreciation, etc.) adn these travel costs that are part of your job ( and not commuting to and from work), not understanding why it would be taxable in the first place. 

The reason they are not taking out taxes is probavly because it is  not taxable to you.  Where does it appear on the paystub?  is it part of the taxable income or is it separately listed as simply a reimbursement? 

[NCperson]

x

[Hal_Al]

Q.  Do I need to pay taxes for this?

A. No.  Reimbursement, from your employer, under an "accountable plan", is not taxable income to you.  Reimbursement for business miles actually driven, at less than the IRS rate ($0.625) qualifies as tax free reimbursement.  It doesn't matter what the frequency of the reimbursement is. 

You report nothing about the reimbursement on your tax return.  

[Mike9241]

the tax laws favor an accountable plan maintained by a business where the taxpayer accounts for the mileage and is reimbursed.   

Also known as an allowance plan, non-accountable plans differ from accountable plans in that the latter requires employees to provide adequate accounting to receive reimbursement. Since money received by employees under an accountable plan is for reimbursement of money spent on business-related expenses it is not taxable.
Internal Revenue Service. "Publication 463 Travel, Gift, and Car Expenses," Pages 30-33. Accessed Mar. 4, 2021.

While money given to employees under a non-accountable plan is meant to be spent on business expenses, such as travel, meals or entertainment, the recipient may spend it any way they choose. For example, if an employer were to give an employee $500 to cover the cost of meals while away on a business trip, under a non-accountable plan, the employee could eat inexpensive food for every meal and pocket the savings.

As far as the Internal Revenue Service (IRS) is concerned, however, it is compensation that is paid in addition to salary or wages. As such, it is taxed as income. Employers may use a non-accountable plan for some expense items and an accountable plan for other expenses.

Internal Revenue Service. "Publication 463 Travel, Gift, and Car Expenses," Page 33. Accessed Mar. 4, 2021.

[NCperson]

@Mike9241 great dissertation on how the rules work, but in an effort to respond to the OPs question, do you agree with @Hal_Al and me that the reimbursement is not taxable? I think the OP would want to know that. 

[Mike9241]

"They pay full amount no taxes taken out" unclear if OP is inferring he's an IC or just that no taxes are taken out of the $.60 reimbursement.  I do think there's an accountable plan based on how OP says they're reimbursed so it wouldn't be *shouldn't) be taxable as an employee. If the op was an IC it would be a wash if reported as income because there's an offsetting deduction for the mileage.  As an IC maybe actual vehicle expenses exceed the reimbursement in which case the OP could take the net deduction.