How to Reimburse Mileage Travel Costs for Remote Workers

Basics of CPM and travel reimbursement

The role of CPM reimbursements is to provide employees with fair compensation for using their private vehicles for work purposes. Each year, the Internal Revenue Service updates standard mileage rates to reflect key economic changes affecting gas prices, depreciation, and other vehicle maintenance costs. As long as companies use this standard mileage rate to calculate CPM reimbursements, they are tax-free. 

In addition to CPM reimbursements, which cover vehicle-related expenses, employees can provide other forms of compensation for their business travels based on each receipt or per diem allowance. Travel expenses that can be reimbursed include accommodation, food, laundry, shipping costs, transportation, and much more, depending on the nature of the business. 

For a remote worker working primarily from home, every trip to company headquarters, conferences, client sites, and team meetings is considered business travel. Regardless of the distance and costs involved, remote employees can expect fair reimbursement for the expenses they incur during those trips. Using the IRS standard mileage rates, companies can reimburse their remote workforce completely tax-free. In 2024, the business mileage rate is 67 cents per mile.

Legal framework and policies for reimbursement

There are no federal labor laws or IRS regulations that require companies to reimburse employees for business travel, so technically the procedure isn’t mandatory, even if reimbursements are a standard in a given industry. The only states that legally require companies to compensate employees for using private vehicles for work are California, Massachusetts, and Illinois.

However, there are situations in which compensation can still become mandatory. According to the Fair Labor Standards Act (FLSA), companies must reimburse employees for business expenses that would otherwise push their earnings below the minimum wage. That, of course, includes expenses related to work-related travel. 

Although reimbursements for mileage or travel expenses are not formally required in most states, many companies still introduce reimbursement policies to maintain employee satisfaction and stay competitive as employers. There are two main models in which businesses reimburse employees for travel expenses:

1. An accountable plan follows the IRS guidelines and may result in completely tax-free reimbursements. It requires employees to report mileage and/or provide detailed documentation for all expenses incurred. 
2. A non-accountable plan doesn’t require mileage tracking and recordkeeping, but reimbursements are treated as a part of the employee’s taxable income. Typically, employers provide a lump sum to cover business expenses ahead of expected travel instead of waiting for employees to submit expense reports.

The first option is more difficult to implement and manage but leads to more accurate reimbursements. The second option, on the other hand, is very straightforward, but employers may miss out on tax deductions.

Ultimately, companies should weigh the tax benefits, compliance considerations, administrative burden, and employee preferences when choosing between an accountable and non-accountable reimbursement plan.

How to calculate CPM reimbursements and travel costs

If you keep diligent records, calculating CPM reimbursements is a straightforward process. You only need to know two numbers:

1. Miles driven for business purposes
2. Mileage reimbursement rate

In most modern businesses, the first number is taken from a mileage tracking app like MileIQ that employees use whenever they travel. A huge advantage of this solution is that the app also handles the calculation and recordkeeping. However, using the traditional pen-and-paper method or a spreadsheet is still viable on a smaller scale.

The second number is quite often the standard mileage rate set by the IRS (67 cents per mile in 2024). However, companies can create their own reimbursement policies, so the rates can differ — just keep in mind that rates need to stay at or under the IRS standard rate to be tax-free and deductible.

Here’s an example of a reimbursement calculation for an employee who drove 1000 miles at a company that uses the standard mileage rate for reimbursements:

In the case of reimbursements for other expenses related to business travel, employees are required to keep receipts for each qualifying expense. Some of the most common examples include:

• Transportation, including airfare, public transport tickets, bus fares, car rentals, etc.
• Accommodation
• Meals (the deduction is generally limited to 50% of the unreimbursed cost)
• Conference fees
• Laundry or dry cleaning
• Tips related to the expenses mentioned above

A good alternative for companies that would like to avoid excessive reporting and recordkeeping is providing employees with a per diem allowance that is supposed to cover all necessary daily costs.

Tools for managing reimbursements

The employee reimbursement process was quite burdensome just a couple of decades ago. Thankfully, it can be largely automated nowadays, making it cheaper and significantly faster. Instead of paper mileage logs and cumbersome collections of receipts and invoices, employees can use apps to track mileage and generate reports, while employers have plenty of secure, digital solutions to help them store, track, and manage records.

Thanks to accounting software and system integrations, companies can also minimize manual entry, reduce errors, and ensure that every business mile and expense is accounted for precisely.

These tools grant employers a bird’s-eye view of the entire reimbursement process. They can quickly review and approve expense reports, issue reimbursements, and maintain a clear record of all transactions for auditing purposes. This level of oversight and automation saves time and promotes a culture of transparency and accountability within the organization.

These tools offer on-the-go workers the convenience of:

• Tracking mileage and expenses
• Receipt scanning
• Effortlessly recording expenses
• Requesting reimbursement
• Staying organized without the hassle of paper logs and manual calculations

This tech-savvy approach transforms the once tedious task into a cakewalk.

Making employee reimbursements an effortless process

Managing business travel reimbursements is a part of most companies’ daily reality — so processes need to be efficient and secure to ensure employee satisfaction and compliance with the IRS. We’re sure that with our tips the task can be much easier. 

Can I be reimbursed for mileage to and from work?

Yes, if you’re a remote employee visiting company headquarters and your primary place of work is your home. If you work outside the home on a daily basis (like at an office or a coworking space), your commute is considered a personal expense and cannot be reimbursed tax-free. However, many employers provide after-tax commute benefits (like parking or transit passes to attract and retain employees).

Can remote workers be reimbursed tax-free for trips to the office?

Yes, if an employee works primarily from home, visiting company offices can be considered business travel and can be reimbursed tax-free at a standard mileage rate. 

How do I calculate my cents-per-mile reimbursement?

To calculate your CPM reimbursements, use the rate set by your employer, and multiply it by your business miles. If you incurred additional costs during your business travel (like parking fees), you can add them for additional reimbursement. 

What tools can help track and manage mileage and travel costs?

You can use mileage tracking apps, like MileIQ to record your business mileage and report it to your employer. Businesses can also use MileIQ to manage employee mileage, including automatically deducting commutes and approvals. reporting systems to manage mileage and travel costs more efficiently.