Vehicle Expense Reimbursement Using IRS Standard Mileage Rates

Tax-deductible (business) mileage expenses are calculated using standard rates published by the IRS. The mileage rate incorporates all the costs except parking and tolls charges, which you can log seprately as expenses.

For a car you own, you may tax-deduct or reimburse any business-related vehicle costs using the IRS standard mileage rates. The mileage rate incorporates all vehicle costs except parking and toll charges, which you may log separately. 

Certain conditions apply when choosing this program.

About this program

Using the Standard Mileage Rates program, each trip logged and classified as #business (or hashtag linked to a mileage rate) is expensed using cents-per-mile.

The mileage rate incorporates all fixed and variable expenses associated with owning and maintaining your vehicle, except for parking and toll charges. No other expense logging is required or allowed with this program.

How to use this program

Select the Standard Mileage Rates program within Psngr app for a vehicle you personally own or lease. You cannot use this program with a vehicle owned by the business (i.e. company car).

The Standard Mileage Rate method is the simplest to use when reimbursing vehicle expenses, because it requires the least amount of input and administrative overhead.

How this program works

When you select this program within Psngr app:

▪︎ Trips are logged (automatically) and expensed using IRS standard mileage rates. We keep these standard rates up to date with the latest IRS publications.

▪︎ Expenses for parking and toll charges can be logged separately. Other expense categories are disabled in the app.

▪︎ Reports include sections for “Trips”, “Expenses” and “Vehicles” section, each with a list of the items logged in the report period and a summary.

▪︎ Report Rules - by default, reports generated by this program are not restricted to a single vehicle. For example, if you use two vehicles, and selected the Standard Mileage Rates program for both of them, your report will include both vehicles. The total tax-deductible amount in the report will be based on the mileage logged with both vehicles combined. You can change this behavior by selecting a specific vehicle in your report rule.

Conditions

For a vehicle you own

If you want to use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then, in later years, you can choose to use either the standard mileage rate or actual expenses.

For a vehicle you lease

If you choose the standard mileage rate program for a car you lease, you must use this program for the entire lease period.

Standard mileage rate is not allowed

You can’t use the standard mileage rate if you:

• Use five or more vehicles at the same time (such as in fleet operations).

• Claimed depreciation deduction for the vehicle using any method other than straight line, for example, MACRS)

• Claimed a section 179 deduction on the car;

• Claimed the special depreciation allowance on the car; or

• Claimed actual car expenses after 1997 for a car you leased.

Disclaimer

Psngr does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors.

Source: IRS publication 463