Why pay mileage reimbursements for volunteer drivers?
This is a very good question that has been asked many times. It is true that most of us have very big and generous hearts. It is more than likely that we would agree to help a neighbor or a friend if they asked us for a ride to their doctor or the store. At least we would if the requests were occasional. It does seem, though, that the payment of mileage reimbursement functions to sort of cement the assistance relationship of the volunteer to the passenger for repeated and continual assistance. Partly, the volunteer comes to view the mileage reimbursement payment as recognition for the important service they are providing. Also, many volunteer drivers have little if any income over and above Social Security and paying the cost of gas is an important consideration.
For the passenger, the ability to offer to contribute to the payment of gas expense makes it easier and more comfortable to initially ask a friend or neighbor to volunteer to assist with their transportation needs. As the relationship continues, because the passenger is helping to pay for the expense of travel, the passenger comes to feel that on-going transportation transactions are more of an equitable exchange.
Are mileage reimbursement payments reportable as taxable income?
We have been asked this question many times. Here is the answer:
Q: "As a government entity that volunteers to drive senior citizens to various locations, the city gives the volunteers mileage reimbursement at 0.35 cents per mile, under the allowable IRS amount. Does the city require a W-9 to be on file for each volunteer, and if they exceed the $600 amount, do they receive a 1099-MISC. even if the mileage rate is less then the allowable reimbursement rate set forth by the IRS?"
A: "Mileage reimbursements exceeding $600 annually are not reportable on a 1099, provided that they are made under an ""accountable plan"" and the reimbursement is at or below the IRS mileage rate (currently $0.51/mile). To qualify as an accountable plan, the expenses must
See IRS Publication 463 for information on travel expenses and reimbursements, and Publication 535 on Business Expenses.
You can reach a live IRS agent with information reporting questions at (866) 455-7438. You should document your conversation with the IRS, including the agent's name and number, as protection. The tax law is very complex and subject to misinterpretation even by IRS agents, but the IRS will honor advice offered by its own agents."
What about using a “gas card” instead of sending a check to pay the mileage reimbursement?So long as the amount placed on the gas card is the exact amount of the verified mileage amount associated with a mileage reimbursement request, the method of paying the mileage reimbursement is irrelevant. If an amount is placed on the gas card that is unrelated to the actual mileage provided by a volunteer during a period, a method of accounting will need to be developed that meets the requirements of an IRS accountable plan. For example, if a card is issued in the amount of $100, somehow the actual mileage during the period must be reported by the volunteer in sufficient detail required by IRS rules, verified, and any excess over actual would need to be returned. One of the requirements of an IRS accountable plan is that there is an adequate accounting of the basis for the expense. In order to meet this requirement, the following support information will need to be provided: 1. The date of the travel 2. The location of the travel’s origination 3. The destination of the travel 4. The purpose of the trip 5. The mileage of the trip Similar details should be provided for the return trip and for all other trips that are reported to justify the request for mileage reimbursement. The excess could conceivably be carried over to the next period and accurately accounted for by the next mileage request or the next, and this process could continue until the excess on the card is completely used. However, accurately accounting for the ongoing use of mileage reimbursement funds advanced on the gas card may be administratively quite complicated.
How are requests for mileage reimbursement received and processed by TRIP in Riverside?Mileage reimbursement request forms are sent to passengers. Both passengers and their volunteers are asked to always record travel on the day of the trip. To complete the form for each trip, the date must be written in, the reasons or purposes of the trip identified, the from and to cities, which are sometimes the same, and then the exact miles driven. Then the volunteer signs to certify that they provided the trip as stated and records the volunteer time that they contributed on that day. At the end of each month, the passenger, often with help from a volunteer, is required to review the full month's request and sign the request certifying that the travel took place as stated. Immediately the request forms are then mailed to TRIP. When received, requests are reviewed for errors and omissions. Sometimes a phone call is placed to the passenger to ask for clarifications of unclear requests. Sometimes they are returned for appropriate review and signatures. Trips for unauthorized purposes are eliminated from the requests. Then we run a machine tape on the miles that are being requested and the data on each request form is entered in TripTrakTM software. The software checks mileage requests against permitted mileage limits and does not schedule payment for mileage that exceeds established limits. When all data has been entered for all users for the month, scheduled payments are audited against submitted request forms and checks are issued. Mileage reimbursement checks are mailed to passengers with blank reimbursement request forms on the 25th day of each month following the month of reported travel. Checks are always mailed at the same time each month to eliminate inquiries about when checks will be issued.
What method of payment of mileage reimbursements is suggested?The TRIP Program in Riverside makes mileage reimbursement payments to program passengers by check. Payments are made to passengers, instead of volunteer drivers, for two reasons: (1) passengers may, and often do, have multiple volunteer drivers and some also change volunteer drivers somewhat frequently - to pay volunteer drivers is more costly to the program; (2) making the payments to the passengers reinforces the idea that the passenger is a contributing partner to transportation transactions. Payment could also be made by direct deposit, but many of the passengers in the TRIP Program in Riverside are elderly or chronically ill and of very low income and do not have bank accounts. Offering direct deposit to those who can take advantage of the service might be a cost savings for some TRIP programs, but there could be other complications. One of the criteria for service provision by the TRIP Program in Riverside is that the recipient of service is resident of a particular area - checks can be sent "do not forward", but direct deposit will go to a person's account regardless of where they might live.