fair mileage rate.

[fenceman]

We are blessed right now with plenty of work and lots of good help. I have three crew running right now out of my own trucks. We have a very large job about 60 miles to the east. I have a dependable and skilled employee willing to use his own truck to transport himself and a couple of other employees to the job. He doent have to pull trailer or haul any equipment. Just drive the crew there and back. Last week i paid him .40 per mile , hes on the clock while driving, they got in some mud last week so i had them wash his truck friday while still on the clock. He seems happy with it. But i wonder , is this a fair rate to both of us . any opinions appreciated.

 

[TennesseeTuxedo]

Are you buying the fuel?

 

[fenceman]

No sir. That's in the .40 a mile it comes to about 50 dollars a day in mileage. We can drive it in a 1 ton diesel for about, 25 dollars. He's driving a half ton. Like I said he seems happy. I just want to make sure I'm being fair. Of course I don't want to pay to much.

 

[cowboy43]

The rate that the Gov. Tax allows business to pay is 57.5 cents a mile, that is to cover actual expense to travel fuel, and wear and tear of the vehicle, which the wear on tires is included in the cost. When does their time start , when they start driving or when they get to the job site?
I am not sure but it seems if you are paying him mileage and he's is transporting your employees his or all of their time will have to start when they get in the vehicle. I re read your post and you are paying him travel time but what about the others if he is acting as your agent are you required by law to pay them travel time also? You never know when an employee will get upset and file on you if you do not follow labor laws, Sometimes the employee knows the laws better the than the employer, it is surprising what a disgruntled employee will try.
Maybe someone better informed on labor laws will answer this question,

 

[Bigfoot]

I get .45. I don't drive my personal vehicle a lot for work, but I do put on about 2000 miles a year performing my job. I have always felt like it was fair. I feel like that figure covers fuel, as well as wear and tear. My truck is now 8 years old, so I guess about 16,000 of the total miles on it are there because of my job. I've long since spent my travel checks, and that's roughly one year of useful life for my vehicle gone. When I put it in that perspective, I wish I never had to use it for work.

 

[bbirder]

If you pay less than the Govt rate, the employee can claim the difference on his tax return IF he can itemize.

I would be worried more about liability. Your employees are your responsibility while they are on the clock should something happen. His insurance may not cover anyone or anything if they discover he is using it for hire. :2cents:

 

[M.Magis]

I'd lean towards paying the government rate. He's happy now, but he may not be when someone tells him he should be getting 57.5 cents/mile. That rate isn't meant to include wages, it's simply fuel/wear/tear on a vehicle.

 

[Gunner]

My company pays me the IRS mileage figure which I think is $0.57.5 per mile. Personally I would just as soon not use my truck but we don't have a truck available other than mine. My boss has come to expect it, so it leaves a bad taste in my mouth. I am salaried so I am paid for my time. If you do work this arrangement with an employee be sure to show your appreciation on a continuing basis (like the wash job), etc. I don't know what the insurance laws are but I would check with your insurance company and possibly his because I think this could get real expensive if something should happen. You never know when something out of the ordinary will happen.

 

[CottageFarm]

If you pay less than the Govt rate, the employee can claim the difference on his tax return IF he can itemize.

I would be worried more about liability. Your employees are your responsibility while they are on the clock should something happen. His insurance may not cover anyone or anything if they discover he is using it for hire. :2cents:

The employees insurance may not cover it, but the employers liability policy will under the non-owned auto section.

.40 is very fair, IMO. You are not under any legal or moral obligation to pay the IRS rate. It's simply a number that the IRS has for tax purposes. What it's really intended to do is establish a rate that gov considers an expense reimbursement vs income. If you pay them more than that rate, anything above it is subject to payroll and income tax. If you pay less than that rate, yes the difference can be taken by the employee if they itemize.

This all applies if the guy is an employee, not a 1099 sub. The rules are a little different in that case for the sub, but essentially the same for the primary contractor.

 

[3waycross]

Probably wouldn't hut to carry some extra liability insurance naming him and his vehicle as insured. In case of a wreck they are going to sue everyone in sight including the both of you.

 

[fenceman]

My company pays me the IRS mileage figure which I think is $0.57.5 per mile. Personally I would just as soon not use my truck but we don't have a truck available other than mine. My boss has come to expect it, so it leaves a bad taste in my mouth. I am salaried so I am paid for my time. If you do work this arrangement with an employee be sure to show your appreciation on a continuing basis (like the wash job), etc. I don't know what the insurance laws are but I would check with your insurance company and possibly his because I think this could get real expensive if something should happen. You never know when something out of the ordinary will happen.

Great info keep it coming. New question s. I'll ask my cpa , but he's like talking to a fence post. So I'll ask y'all first. Irs rate is that what I'm required to pay..or simply the amount he can deduct. Do I add it to his regular check and take taxes. This is a local small town boy that's worked for me on and off for me for years. His brothers to. I know his dad and his upbringing. I'm confident if he had a problem. We would work it out sitting on a tailgate. He's one of several I have right now that have been laid off from the oil fields out west

 

[CottageFarm]

No you are not required to pay the gov rate. The rate is a basis for taxation.
No, you do not withhold taxes on it, it's considered an expense reimbursement. For simplification of your own records, write a separate check for it rather than including it in his regular paycheck.

Just to confirm, this guy is an employee, not a 1099 independent subcontractor?

 

[fenceman]

No you are not required to pay the gov rate. The rate is a basis for taxation.
No, you do not withhold taxes on it, it's considered an expense reimbursement. For simplification of your own records, write a separate check for it rather than including it in his regular paycheck.

Just to confirm, this guy is an employee, not a 1099 independent subcontractor?

Thanks for answering my question
twice. I think you answered the first time will I was typing and driving. :hide: Any way thanks . No he s not a sub. What would that change.

 

[HDRider]

No you are not required to pay the gov rate. The rate is a basis for taxation.
No, you do not withhold taxes on it, it's considered an expense reimbursement. For simplification of your own records, write a separate check for it rather than including it in his regular paycheck.

Just to confirm, this guy is an employee, not a 1099 independent subcontractor?

Thanks for answering my question
twice. I think you answered the first time will I was typing and driving. :hide: Any way thanks . No he s not a sub. What would that change.

Hey now..

 

[CottageFarm]

The difference is primarily how it affects him. It's mostly just a difference in paperwork for you.
If he's a sub, it's no longer a reimbursement to him, it's just considered part of his income (revenue)
You would add it to his 1099 as income and deduct as a labor expense.
He would need to track his own mileage and travel expenses and deduct accordingly. He has a couple different options on how to do vehicle costs.

 

[CottageFarm]

I was typing and driving[/b]. :hide: Any way thanks . No he s not a sub. What would that change.

Hey now..

:lol2: missed that part...shame on you...ya ain't supposed to be that!

 

[Kingfisher]

How did Payday go today? How's that fence coming along?

 

[fenceman]

How did Payday go today? How's that fence coming along?

Jobs are all going great. Payroll as always was to dam much. :cry2: we got a heck of a rain a couple hours ago. Me and wife were at the diner in Florence. They had to close when the water started coming through the back door. Got my ribeye down though. I imagine we will spend the weekend fixing water gaps.

 

[Brute 23]

Fair or not is between yall two.

.40 is not enough to cover vehicle expenses in most cases. It's just a matter of whether he will ever realize it or not.