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Does mileage reimbursement constitute 1099 MISC income or W2 when one is a salaried employee?

Asked by: dtba 5305 views YA Discussion

I was recently hired so I’m a W-2 employee. My job requires me to drive a lot and my boss agreed to reimburse my mileage at a rate we agreed on and any additional parking costs. The car I drive is my personal car and not a company car.

Does my mileage and parking fee reimbursement constitute 1099 MISC income or should it get added to my W-2? Can I elect which one, or do I even have a choice? Which is most beneficial to me under these circumstances?
***And if it’s in fact neither, then how does my employer pay me? I’m concerned that they will cut me check and then at the end of the year give me a 1099 for all of it.

How others found here:

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8 Answers

  1. Rick B on Jul 31, 2012 Reply

    Neither. It is not income, it is reimbursement for expenses you incurred.

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  2. tro on Jul 31, 2012 Reply

    if you are reimbursed what you spend, there is no income

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  3. card-ron on Jul 31, 2012 Reply

    If you are on an accountable plan, which means you submit receipts/mileage log to your employer and they reimburse you, as long as the reimbursement does not exceed IRS limits, your reimbursement does not get reported to the IRS and is not considered as income to you.

    If you are on a non-accountable plan (you do not submit receipts/mileage log), your reimbursement gets added to your W2 income and, as applicable, you deduct business expenses on your Schedule A.

    As an employee (W2), you should not receive a 1099 for your travel expenses.

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  4. A Hunch on Jul 31, 2012 Reply

    There is an IRS reimbursement rate which is currently 55.5cents per mile. The rate can change during the year and at times is different for different regions (but not right now).
    – an employer will typically not provide any tax documentation for mileage reimbursement. It’s an accounts payable process that can be included with your regular pay but not taxed. Or it can be a separate check.

    If your company pays you more than the federal IRS rate, the amount over the IRS rate is income to you and would be listed on your 1040 tax form as “other income” (line 21 for 2011).

    If your company reimburses you less than the IRS rate, the difference is a tax deduction for “non reimbursed employment expenses”. To get this money, you must itemize (schedule A) and must be more than 2% of your income.

    Your parking fee should be just a wash… they pay your what you spend. But if they pay you extra or less, it would be treated the same.

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  5. Quick Answers on Jul 31, 2012 Reply

    1. Employees are NOT supposed to get a 1099-Misc. Period. The IRS even added a new category to form 8919 for the employees who do get them.

    2. Either you are on an accountable plan or a non-accountable plan. If the plan is non-accountable or the amounts of reimbursement are more than the IRS allows, the money will show up as income on the W-2. If the plan is accountable, the money won’t be income on the W-2, but will now be reported in box 12 with a code of L so you can’t accidentally deduct the same money a second time.

    3. An accountable plan needs to have you submit an expense report to your boss showing date, customer, business purpose, miles driven, etc. It cannot include commuting. You need to keep a copy just in case he chickens out and decides it’s not really an accountable plan. (He should play even-steven, otherwise he’ll be paying fica/mc/futa on the amount included in wages.)

    4. Ignore the person who said, oh, use line 21 on on the tax return. No, no, no. If you have to include it as income, it goes on line SEVEN with all your other wages, even if you have to use form 8919. If it’s income to you, you then use form 2106 to try to deduct it.

    You may want to print IRS pub 463 and give it to your boss. Also look at put 15-B.

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  6. Lynne on Jul 31, 2012 Reply

    The best for you would be to have the company reimburse you using an accountable program.

    You would need to provide documentation to your employer then get reimbursed. It is fine that they would give you a check; this does not mean they would need to report the money on a w-2.

    Think of it this way. If you had to go out and buy printer cartridges and used your own money, then you gave your employer the receipt and got reimbursed. That reimbursement would not be income to you. The mileage and parking may be treated the same way..

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  7. Max Hoopla on Jul 31, 2012 Reply

    If you get a mileage rate that is no more than the IRS standard mileage rate nobody reports anything.

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  8. jack bauer on Jul 31, 2012 Reply

    deduct you r mileage expenses as per irs allowance and then reduce the total by your reinbursement amount.

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