Are employees’ mileage reimbursements taxable? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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Are employees’ mileage reimbursements taxable?

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in Office Management,Payroll Management

Q: Employees who aren’t on call, but who are called back to work to handle an emergency, are reimbursed for all of their traveling expenses. Must we include these reimbursements in their income and tax them?

A: It depends. If you call employees back into the office, your reimbursements are fully taxable because you’re reimbursing them for their normal commuting expenses. However, reimbursements aren’t taxable if employees drive somewhere other than the office, and they could have their mileage reimbursed as a business expense.

Key: The accountable plan rules still apply, so employees must substantiate their business miles.

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