One size doesn’t fit all for mileage reimbursement
Flat car allowances are a simple reimbursement option. Unfortunately, they’re also flawed. Without accurate mileage tracking, a car allowance is considered additional income. That means it’s not an accountable plan and can cost both employers and employees significant dollars in tax waste. The organization pays more, and employees get less.
Motus offers an alternative.
An Accountable Allowance program reduces company tax waste associated with FICA and income taxes. That also means increased take home reimbursements for mobile employees. Motus maximizes the tax-free benefit with minimal effort from the company.
Or consider leveraging tax-free individual mileage reimbursements.
Flat car allowances are a one-size-fits-all approach. Employees located in different geographic regions can have drastically varied driving costs. So the one-size-fits-all approach is not helping them out.
Take for example car insurance premiums. In Baltimore, premiums are much less expensive than in Detroit. The average annual premium in Baltimore is roughly $2,423 and the average annual premium in Detroit is $7,415. Employees in Detroit are getting reimbursed far less than what they’re paying just to insure their vehicle. Meanwhile, employees in Baltimore are enjoying the payment intended for business driving as extra compensation. The result? Unproductive employee behavior and mileage reimbursements that aren’t fair or accurate.
Individual mileage reimbursements provide mobile employees with payments based on exactly where and how much they drive for business. The choice is easy. Personalized vehicle reimbursements reduce costs, eliminate tax liability and increase employees’ productivity in the field. It’s also a win for employees. Their cost of driving for business with an IRS compliant program is fully reimbursed.