How to Report Mileage Reimbursement Income
- 1). Determine your total car allowance. The car allowance is the amount your employer or client reimburses you for the business use of your car.
- 2). Identify the difference between an accountable reimbursement plan and a nonaccountable reimbursement plan. Reimbursements under an accountable plan are not counted as income on your W-2.
- 3). Determine if your employer is treating the reimbursement as an accountable or non-accountable plan. If the reimbursement is include in Box 1 on your Form W-2, it is a nonaccountable plan and it will be taxed as regular income.
- 4). Include the total amount of reported reimbursement income on your tax returns as part of your adjusted gross income. Use the most recent tax tables to determine your tax rate. This rate applies to your entire adjusted gross income, including reimbursement income.
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