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Lev
Lev, Tax Advisor
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Experience:  Taxes, Immigration, Labor Relations
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Church has a youth director (treated as employee). Every month

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Church has a youth director (treated as employee). Every month she submits expense report for reimburesment. Is her mileage from her home to church reimburseable? Is it exempt from W-2?
Submitted: 2 years ago.
Category: Tax
Expert:  Lev replied 2 years ago.

Hi and welcome to Just Answer!

 

see illustration on page 14 in this publication - http://www.irs.gov/pub/irs-pdf/p463.pdf

Travels from your Home to Temporary work location or between work locations are deductible.

graphic

 

However travels from home to the main job location is considered as commuting and may not be treated as business related travel expenses. In this case - such reimbursements should be treated as wages - subject of both income and employment taxes.

Rules for the employer not to include business related expenses into wages and for the employee to deduct such expenses are generally same.

See on the same page:

Daily transportation expenses you incur while traveling from home to one or more regular places of business are generally nondeductible commuting expenses. However, there may be exceptions to this general rule. You can deduct daily transportation expenses incurred going between your residence and a temporary work

station outside the metropolitan area where you live. Also, daily transportation expenses can be deducted if: (1) If you have one or more regular work locations away from your residence or (2) your residence is your principal place of business and you incur expenses going between the residence and another work location in the same trade or business, regardless of whether the work is temporary or permanent and regardless of the distance.

 

Let me know if you need any help.

Be sure to ask for clarification if needed.

Customer: replied 2 years ago.

Still not clear. Travel from home to church would be included in wages but travel from church to store to pick up supplies or visit youth would not be taxable. How do I report on w2? Travel from home to church in box 1 and travel from church to youth's home box 12L?

Expert:  Lev replied 2 years ago.

Travel from home to church would be included in wages - correct

but travel from church to store to pick up supplies or visit youth would not be taxable - correct.

How do I report on w2?

Travel from home to church in box 1 - that is correct - that amount is included into boxes 1, 3, and 5 on form W2 - because it is treated as wages for income and FICA taxes.

and travel from church to youth's home box 12L - that is NOT reported on W2. Qualified reimbursements to employees for business related expenses made under accountable plan are not included into wages and are not reported on W2 form.

 

Let me know if you need any help.

Expert:  Anne replied 2 years ago.

Hi

 

Different expert here. With all due respect to the other expert, he did provide you with the correct information should you choose to reimburse your employee's commuting mileage/expenses.

 

However, for the vast majority of employees, driving to and from work, as pointed out in the chart the above expert referred to, commuting mileage is never deductible, and frankly, the IRS views this as commuting, or "personal" mileage and is not deductible. It is also not generally part of an employee's wages.

 

For example, I commute more than 18 miles (one way) in order to do my job. I am not reimbursed for my commuting expense, nor is any part of the expenses included in my income.

 

My employer did not state that I had to live so far away from my job, so he is not responsible for any expenses I incur to get to work.

 

So again, IF you want to reimburse the commuting expenses, the above expert is correct.

 

However, most employers do not reimburse the costs of commuting.

 

I'm sure that the reason your employee includes the commuting costs because he/she isn't sure if they're reimbursable or not.

 

 

I truly hope this information is helpful but please do not rate until you are satisfied. If you want to click on 1 or 2 just click on the continue to work with me button instead. You will then be able to add any other info or respond to what I have posted so far. Rating 3-5 gives me credit and a good rating but you can still converse with me.

 

Customer: replied 2 years ago.


When she was hired it was agreed that she would be paid mileage from home to church. She does provide monthly expense report showing all trips and details.


 

Expert:  Lev replied 2 years ago.

That is OK for the employee to reimburse for commuting expenses - while the law doesn't require such reimbursements - it might be part of the employment agreement as in your situation. That is not rare when employees provide transportation allowances.

However because according to the IRS such reimbursements are not qualified business expenses - the church would be required to treat these payments as wages - and include into W2 form as wages.

 

Let me know if you need any help.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22838
Experience: Taxes, Immigration, Labor Relations
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