Guidelines for Mileage Reimbursement for Salespeople
Driving as a salesperson requires money for fuel, oil changes and basic maintenance. Wear and tear on your vehicle also leads to mechanical repairs and depreciation. Mileage reimbursements are standard, with variable rates based on company policies. A standard reimbursement is dictated by the IRS and serves as a general guideline. Many companies opt for the standard reimbursement rates, but some add to the total based on the organization's sales routes.
Employed and independent salespeople can claim mileage as a tax deduction. Independent contractors and business owners without a direct reimbursement payment from an employer are especially dependent on the deduction as a tax resource. The mileage works as an expense, and folks with intensive sales routes can write off the standard rate for every mile they drive for work.
Mileage rates are subject to change in each tax year. The standard rates are determined based on market research that determines normal expense ranges for using a vehicle. The rate increased from 2017 to 2018. The 2018 IRS rate for normal business use is 54.5 cents per mile. Additionally, you can write off 18 cents per mile for vehicle use relating to medical purposes. The standard 2018 rate for any charitable use is 14 cents per mile.
Salespeople working for an employer are often reimbursed directly. Public sector employees are typically paid the IRS rate in reimbursement checks, although sales roles are uncommon in the public sector. Private sector salespeople are often reimbursed for mileage using the standard rates or a rate increase based on individual company policies. Additional reimbursements are made for routes where you must drive on rural dirt roads or other areas where wear and tear is above normal.
Diligent mileage tracking is critical for reimbursement. The ability to prove every mile to your employer and/or the IRS is imperative for you to receive the reimbursement or deduction. A spreadsheet that lists the date, starting mileage, ending mileage, total miles and notes is easy to store on a clipboard and log each day. Mileage-tracking phone apps are also convenient; they track trips and allow you to make notes and log those miles. For dedicated sales routes, a physical log is convenient and will not fail to record when your phone dies or loses service.