March 27, 2014
Q&A: Personal Vehicles for Church Business
What's the right amount for mileage reimbursement?
Q: For church employees using their personal vehicles for church business, do they use the 56 cents or the 14 cents for mileage reimbursement in 2014?
A: I directly address mileage reimbursements in Chapter 7 of my annual Church & Clergy Tax Guide.
Every year, the IRS provides guidance pertaining to a reimbursement rate for the business use of personal vehicles by employees, such as pastors and staff. In 2014, the IRS recommended 56 cents per mile. Only employees who own their vehicles and used them in the first year they were available to their employers for use in their work can be reimbursed.
The 14-cent rate is set by statute, and it pertains to the business use of personal vehicles by unpaid volunteers of charitable organizations. Churches that reimburse volunteers for the use of their personal vehicles on church business can only use the 14-cent rate.
Churches that reimburse employees for the use of their personal vehicles on church business can choose their rate.
If the church chooses to reimburse at 56 cents per mile for an employee, and the reimbursements are requested under an accountable plan (meaning the requests are made to the church within 60 days of travel and with records detailing miles traveled and the business purposes of the miles traveled), then the church is not required to report the reimbursements as income for employees.
If the church chooses to reimburse at more than 56 cents per mile for an employee under an accountable plan, then the amount reimbursed up to 56 cents per mile isn't taxable income, but everything above that is taxable income.
Or, if the church chooses to reimburse less than 56 cents per mile for an employee under an accountable plan, then reimbursements up to the amount chosen aren't taxable income, and employees can claim the remaining balances as business deductions (presuming they maintain adequate records substantiating the miles traveled and the business purposes of the miles traveled).