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Mileage paid & reimbursed > Std mileage rate

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    Mileage paid & reimbursed > Std mileage rate

    Client will be charging their customers mileage at $.60/mi in 2008 and reimbursing himself (2% shareholder / employee in S corporation) at $.60/mi for business mileage in his personal car.

    What is the tax impact of this? I thought reimbursing at over the IRS standard rate resulted in income to the employee/shareholder, but I can't find this anywhere. Also, would just the excess over standard rate (i.e. $.095/mi) be considered income or the full $.60/mi.

    I may be able to convince him to only reimburse himself at $.505/mi.

    I see the mileage charged to customers as income & don't see any issues there. I recommended charging the IRS standard mileage rate and billing for travel time, but client said arrangement letters have already been signed.

    #2
    Mileage paid & reimbursed > Std mileage rate

    The excess amount over the standard IRS rate paid to himself will be taxable on his personal return.

    I reimburse myself from my corporation at the IRS rate. Tax deductible by my business, tax free to me.

    I bill my clients 10ยข per mile over the IRS rate, currently billing $0.605/mile. (0.505 + 0.10).
    Jiggers, EA

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      #3
      pub 463

      Try here, esp. the chart in ch. 6:

      Comment


        #4
        Thanks! pp. 29-32 of the Publication are exactly what I need.

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