By Richard R. Hammar, J.D., LL.M., CPA
© Copyright 2002 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m124 c0102
The standard mileage rate for business miles driven
during the year 2002 will be 36.5 cents per mile for all business miles driven
during the year. This is a 2 cents per mile increase over the 2001 rate. The
standard mileage rate can be used by taxpayers to compute a deduction for the
business use of a vehicle. It also can be used by employers to reimburse
workers' business miles under an accountable expense reimbursement arrangement.
If your church has adopted an accountable
reimbursement arrangement, be sure that your reimbursements for year 2002
reflect the new rate. If the church reimburses business miles at a rate of more
than 36.5 cents per mile, then the excess must be reported as taxable income to
the employee on his or her W-2. In addition, payroll taxes must be withheld in
the case of a nonminister employee or a minister who has elected voluntary tax
withholding. If a church reimburses business miles at less than the
IRS-approved rate in year 2002, then the "difference" represents an
unreimbursed expense that may be claimed as a business expense deduction if
certain conditions are met.