How to calculate mileage for reimbursement
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When it comes to business travel, calculating mileage for reimbursement is a crucial part of the process that ensures employees receive an accurate and fair amount for the expenses they incur. Companies often have specific policies in place to detemine the method and rates used for mileage calculation. In this article, we will explore the standard process for calculating mileage for reimbursement.
1. Record your starting point and destination:
Make sure to accurately note your starting point and destination, as well as any additional stops made along the way. This information will be needed to determine the total number of miles driven.
2. Track your miles:
Utilize tools such as your car’s odometer, a GPS device, or a smartphone app to track the exact number of miles driven between points. Some phone apps even offer tracking specifically designed for mileage reimbursement purposes.
3. Calculate total miles driven:
Once you’ve recorded all your stops and tracked your miles, add them together to get the total miles driven during the trip.
4. Check the applicable reimbursement rate:
Companies often use a specific rate per mile driven – this is typically based on guidelines set by a government agency such as the IRS or a similar authority in other countries. In the US, for example, the IRS sets an annual standard mileage rate that is commonly used by many businesses for reimbursement calculations. As of 2021, this rate is 56 cents per mile driven for business purposes.
5. Multiply total miles by reimbursement rate:
Now that you have both an accurate mileage count and established reimbursement rate, multiply these two figures together: Total Miles Driven x Reimbursement Rate = Reimbursement Amount.
6. Provide documentation and submit claim:
To ensure accurate reimbursements and avoid discrepancies, provide documentation such as a mileage log that includes dates traveled, starting point and destination(s), odometer readings or GPS data, purpose of each trip (i.e., business-related), and the total miles driven. Submit this documentation along with any prescribed claim forms or online submission systems used by your organization.
7. Follow up and receive payment:
After submitting your claim, make sure to follow up with your company’s finance or HR department to ensure it has been processed. If approved, you should receive payment according to their reimbursement procedure, which could be through payroll or a separate check.
By following these steps, you can calculate mileage for reimbursement accurately and efficiently, helping to ensure that you are fairly compensated for expenses incurred while driving for business purposes. Remember always to review your organization’s specific policies on mileage reimbursement, as some companies may have different rules or rates in place.