The IRS standard-mileage-reimbursement rate for 2009 will be 55 cents per mile for all business miles driven, down from the rate of 58.5 cents a mile that was in effect in the second half of 2008. The IRS had made a special adjustment for the second half of 2008 in response to a spike in gasoline prices. The rate in effect for the first six months of 2008 was 50.5 cents per mile.
Beginning on January 1, 2009, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be:
- 55 cents per mile for business miles driven
- 24 cents per mile driven for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
The mileage rates for 2009 reflect generally higher transportation costs compared to a year ago, but the rates also factor in the recent reversal of rising gasoline prices. While gasoline is a significant factor in the mileage rate, other fixed and variable costs, such as depreciation, enter the calculation.
Even with the economy in tatters, many employees remain on the go. Check out our sample Business and Travel Expenses policy here.
The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.
Employers who use the IRS standard mileage rate to reimburse employees may deduct the reimbursement as a business expense. If employers use the approved rate (or a lower rate), the IRS considers that requirements to substantiate and adequately account for the expense are satisfied without extensive documentation of actual expenses.
Don’t Let Reimbursements Become Your Downfall
Despite the ailing economy, employees continue to travel, which means you continue to be on the hook for expense reimbursements.
While employees have always been entitled to recoup these expenses, they’re a lot more vocal now about wanting their money ASAP. And if you drop the ball, you could find yourself in court. Several class actions have recently been filed in California courts by disgruntled employees who claim their employers failed to reimburse them for travel and business expenses.
A strong policy is an essential first line of defense. Check out our sample Business and Travel Expenses policy—free with a 7-day trial to CEA Online.