By Richard R. Hammar, J.D., LL.M., CPA
© Copyright 2004 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 m90 m07 c0104
The standard mileage rate for business miles driven during the year 2004 will be 37.5 cents per mile for all business miles driven during the year. This is an increase of a cent and a half over the 2003 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 2004 reflect the new rate. If the church reimburses business miles at a rate of more than 37.5 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 2004, then the "difference" represents an unreimbursed expense that may be claimed as a business expense deduction if certain conditions are met.