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).

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This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations

Comments

Displaying 1–1 of 1 comments

Robin Standlee

April 09, 2014  8:41am

Regarding the 14 cent per mile rate for volunteers, it is my understanding that the statutory rate determines the amount that is deductible for charitable purposes (e.g., volunteer mileage), not necessarily what is allowed to be reimbursed to the volunteer. It would seem that the church could reimburse any amount, or even provide a flat dollar allowance. Of course, they may have to issue a 1099-MISC to the volunteer, and the volunteer could only deduct up to 14 cents per mile, but at least they would be reimbursed for something closer to their actual costs for use of their vehicle. For a charity that relies heavily on volunteers to make outreach calls, this could be an important factor. Thoughts?

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