I usually do work close to home so I don’t charge separately for travel or mileage, but I just did a job that was 100 miles away so 200 miles round trip. Is it acceptable to charge for those miles with the standard IRS mileage rate? How does everyone on here charge for mileage? Do you just make it part of your standard rates and not a separate item? Thanks!
What do you charge clients for travel/mileage?
- Thread starter RickMC
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It is VERY acceptable but did you mention this when quoting the job? It might leave a sour taste in the client's mouth if they were expecting to pay this price and then you invoice for THIS price.
We have a "Home" rate with no travel and then we use the IRA rate for anything outside of this. If it's within 30 miles we don't charge anything extra (it's built in) but over 30 yes TRIP CHARGE is added. This is part of our initial conversation and on our "Check List" when talking to new clients.
I did tell them I would be charging for mileage based on the IRS rate. They understand because they know I was coming from so far away.
Outstanding! That's how we like to do it. I personally love charging for Trips. I once had a client to pay me to drive from my location (western NC) across the state to the Atlantic Ocean, back home, and back to Atlantic Ocean again over a 3 day period. We made a lot of BANK on that client and they were more than happy. In fact I think the footage was recently re-released by the network a couple of months ago LOL!
If someone will pay me to ride down the road I'll let them LOL.
Sorry if this is a dumb question but I’m not well versed in how taxes work for 1099s, and this past year was my first year doing commercial drone work. I don’t have my own company set up so I work as an independent contractor. Am I still able to deduct this mileage when I do my taxes? I know I definitely will for jobs I did where mileage and travel wasn’t reimbursed, but in this case since I am getting reimbursed for the mileage, is it still tax deductible? Again sorry if dumb question, I should talk to an accountant.
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R.Perry
Well-Known Member
Yes mileage reimbursements are tax deductible as long as it doesn't exceed 54 cents a mile I believe. Only dumb question is one that isn't asked.
Eagle One-Eye
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I see some confusion here. Your charges for mileage or travel are not "tax deductible" because it is income that you record. If you have travel expenses (gas, oil, repairs, etc.) that are NOT directly reimbursed by your customer, those are deductible on your business tax forms (Schedule C).
I charge 85 cents per mile traveled if total time is under one hour. If travel time is over one hour, I switch to a $95.00/ hour rate, split into half hour segmnts. This is all spelled out on my rate card, which every customer gets when hiring me.
I charge 85 cents per mile traveled if total time is under one hour. If travel time is over one hour, I switch to a $95.00/ hour rate, split into half hour segmnts. This is all spelled out on my rate card, which every customer gets when hiring me.
Ok I’m seeing confusion too. You say no but R.Perry above says yes. After doing research some sources are saying yes you can. I saw something about “reimbursed expenses” being tax deductible. So who is right here?
I had a home area of 40miles. After that it’s 1.00/mile. That charge is based upon actual mileage and the fact that the truck with a built in inverter, may be sitting running and charging batteries (2500HD diesel). It’s all rolled up in the quote and the client is aware of the home mileage + extra. I can only claim mileage after my home area. Operating costs.
I charge zero for travel time and charge according the job. I sometimes travel long distances and cover that travel expense by doing multiple jobs in the same area or on the way. Why should they pay me to travel when they might find someone local?
Maybe because a person farther away delivers a better service than someone local?
I’m not an accountant. But I throw in my 2 cents. Mileage is an expense regardless of reimbursement. If you get reimbursement aka more income then you will claim the income and the expense and not pay any taxes on the mileage money.
If you do not have a company you are a sole proprietorship and if you get a 1099 you need to claim the extra income. This may trigger some other self employment taxes. If your are doing your taxes via a TurboTax or other I think you will need to use the small business version.
Well maybe that was more like 4 cents.
If you do not have a company you are a sole proprietorship and if you get a 1099 you need to claim the extra income. This may trigger some other self employment taxes. If your are doing your taxes via a TurboTax or other I think you will need to use the small business version.
Well maybe that was more like 4 cents.
Eagle One-Eye
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Davidblezard, that is about right. "Mileage reimbursements" are income, not deductibles, as R. Perry seems to think. If and when you record the mileage driven in your tax form, it's an expense, but if you get reimbursed by the client, that is income, offset by your claimed mileage.
When I do my taxes, for example, I claim a certain number of total miles driven for business in the past year. That's considered my expense. When my client pays me for xx miles driven to and from a job, that's income I received but don't have to pay income tax on, because I am claiming the driven mileage as a business expense against that payment.
When I do my taxes, for example, I claim a certain number of total miles driven for business in the past year. That's considered my expense. When my client pays me for xx miles driven to and from a job, that's income I received but don't have to pay income tax on, because I am claiming the driven mileage as a business expense against that payment.
I'd like to think so, but I also don't like the idea of making that a separate cost. I build it into my pricing. I don't want to give them the idea of looking elsewhere. Also, I think it behooves me to strive to do enough work in a particular area so it is not an issue and so I do not need to be paid so much to be a driver.
R.Perry
Well-Known Member
That is exactly right, my response wasn't accurate, what I should of said you mileage expense is deductable, but you do need to show the reimbursement as income, so in reality you aren't being taxed for the reimbursement.
IronManNDFW
Member
A little late to the party but.... I have been doing Business taxes - specifically small business taxes for 27 years. Audited twice and the IRS owed me money both times. Most people know you have to pay interest and penalties if you are late. Yet if you get audited and they find they owe you money the IRS has to pay late fees and interest to you! BTW DON'T forgot to add the interest and penalties they paid to you on the next year's taxes as income. 
Sandbagging helps with the IRS. If I don't need to take x deduction for the current year, I may hold onto it or roll it forward. You can carry a loss forward 2 or 3 years (it changes) and backwards 7 years (again it changes) yet that has been the norm for the past 27 years.
To charge or not to charge is the question. I would say that depends on your market. What do others charge. Think of this: You have a job 3 hours out of town. The client wants you or you sold them on your deliverable. How do you "charge for that time on the road and milage?" Would you have another job if you weren't doing x clients job 3 hours each way? You can charge them per mile, or per hour or a combination. That is income as far as the IRS is concerned.
How you package the "cost of travel" to your client is up to you. Rolled into the total or separate line on the invoice. How it os presented may also depend on the client. Have an idea based on your area, your vertical, etc. Remember this is your business you decide how to bill for it our not.
Expenses:
Eagle Eye One has the details the most correct.
Keep track of your business mileage and deduct it at the standard rate for that year on your schedule C. You have the option of taking fuel, oil, maintenance, tolls, that is apportioned to the business. You also need to keep track of your personal mileage if you only have 1 car available for both business and personal.
I'm not sure how the Mile IQ app works or what it interfaces with at tax time to help determine your personal and business mailes. I understand it generates a report, yet IDK what happens if you accidentally miscatogrize a trip.
Irrespective: If you are doing enough business get an accounting package. Quickbooks SE is one that is popular. Turbo Tax is another Intuit company so importing from Quickbooks to TT is seamless.
I'm an advocate for taking every deduction we are eligible to take, and pay the lowest taxes we can. I am not fond of giving the US Government a TAX FREE loan on my money for a year or longer until I file a tax return. Trust me if the IRS owes you a refund they aren't in a hurry to send you a refund either. Cash management.
Summ it up: The answer is it depends. you are the boss and janitor of your small business. You get paid to make these business decisions.
Smart business people hire professionals for advice in Legal, Accounting and Tax issues.
If you have any questions I can answer for you please send me a message or e-mail.
Happy Vapor Trail...
Bob
Sandbagging helps with the IRS. If I don't need to take x deduction for the current year, I may hold onto it or roll it forward. You can carry a loss forward 2 or 3 years (it changes) and backwards 7 years (again it changes) yet that has been the norm for the past 27 years.To charge or not to charge is the question. I would say that depends on your market. What do others charge. Think of this: You have a job 3 hours out of town. The client wants you or you sold them on your deliverable. How do you "charge for that time on the road and milage?" Would you have another job if you weren't doing x clients job 3 hours each way? You can charge them per mile, or per hour or a combination. That is income as far as the IRS is concerned.
How you package the "cost of travel" to your client is up to you. Rolled into the total or separate line on the invoice. How it os presented may also depend on the client. Have an idea based on your area, your vertical, etc. Remember this is your business you decide how to bill for it our not.
Expenses:
Eagle Eye One has the details the most correct.
Keep track of your business mileage and deduct it at the standard rate for that year on your schedule C. You have the option of taking fuel, oil, maintenance, tolls, that is apportioned to the business. You also need to keep track of your personal mileage if you only have 1 car available for both business and personal.
I'm not sure how the Mile IQ app works or what it interfaces with at tax time to help determine your personal and business mailes. I understand it generates a report, yet IDK what happens if you accidentally miscatogrize a trip.
Irrespective: If you are doing enough business get an accounting package. Quickbooks SE is one that is popular. Turbo Tax is another Intuit company so importing from Quickbooks to TT is seamless.
I'm an advocate for taking every deduction we are eligible to take, and pay the lowest taxes we can. I am not fond of giving the US Government a TAX FREE loan on my money for a year or longer until I file a tax return. Trust me if the IRS owes you a refund they aren't in a hurry to send you a refund either. Cash management.
Summ it up: The answer is it depends. you are the boss and janitor of your small business. You get paid to make these business decisions.
Smart business people hire professionals for advice in Legal, Accounting and Tax issues.
If you have any questions I can answer for you please send me a message or e-mail.
Happy Vapor Trail...
Bob
I would make it apart of your standard rates and not a separate item, have a stipulation if necessary. I just rec'd an Invoice from a Vendor that is charging us mileage to come to our office for a meeting, I don't agree with this, but.......then they are also charging on top of of .56/mile + 15% on the reimbursable.....What's that about.......they want to be paid for Invoicing me......are you kidding?
Sorry for the long post, but I really wanted to add reasoning to my stance, because it is only my decision for my business, and you need to decide for yourself.
I ran an IT service company for 20 years. We 100% charged travel time as a consultant because it was taking our engineer, who could be billing from a profitable revenue stream closer, where once on site we charged between $175-$250/hr. At $.54/mile, I would always prioritize jobs closer to me which could alienate good, long term clients.
Also depending on where you live, I can travel 70 miles in rural Michigan in less than 60 minutes, or in downtown LA California, you can take 75 minutes to travel 15 miles. I personally disagree with charging clients on the IRS rate. Basically you can take off the IRS rate from taxes, and add in the travel fees as income. The IRS rate is for the vehicle, not the person. What if you brought a VO with you, are you paying them window time or is that free and will be forever?
If you travel 200 miles, and charge $108 for it, that's what the IRS deems is the cost for the vehicle to travel, insurance, maintenance, gas, but you had a person in that vehicle for maybe 3 hours, how is the 3 hours compensated? Something like $40/hr both ways plus the IRS rate for miles. Or come up with a standard, like $60/hr travel all inclusive. You take some risk in case of emergencies, but is easier to sell as a base rate, non-flight service, which could also be non-flight fees for planning, processing, etc.
Now I am talking about midsized companies, not doing a one off real estate photo shoot. But say you got that job 100 miles away, and there is some emergency on the road, a boat exploded on the freeway, and you were stuck for 6 hours, ended up having to get a hotel and almost 2 full days of labor, for $108... That isn't fair to you, nor how most consulting/service companies work. Either they limit their distance, or they charge a fair amount (and often have a limited service area with no fees).
If you had a job, and your boss asked you to drive 2000 miles to a jobsite, taking several days each way, would you only charge him $.54/mile and skip any wage? Or would you expect to be paid for the time you took as well? Apply that to if/when you had employees (not 1099). They would expect their hourly wage for the drive, and where is the revenue for that?
It is all negotiation, if it means getting the job, that is also something really easy to waive as a line item which will get some purchasing agents to sign up, waive it, cut in half, whatever, it will help in negotiations. Once they value your work, you can then say you can no longer waive the fees.
My advice is from 20+ years in IT consulting, managing up to 25 engineers going to client sites from across the street, to completely across the country (overnights charged expenses as well, per diem and hotel fees). If you low ball your fees, then some clients will think you aren't good enough because you don't value your own time.
All above is my opinion, and do what works best for you. But I hope I added enough things to think about to make an informed decision. It is also dependent on what the competition is doing, and I don't mean Craigslist unless that's where you get your jobs from. If you win every job you quote, you are likely way undervaluing your service which is only good to gain market share,
I ran an IT service company for 20 years. We 100% charged travel time as a consultant because it was taking our engineer, who could be billing from a profitable revenue stream closer, where once on site we charged between $175-$250/hr. At $.54/mile, I would always prioritize jobs closer to me which could alienate good, long term clients.
Also depending on where you live, I can travel 70 miles in rural Michigan in less than 60 minutes, or in downtown LA California, you can take 75 minutes to travel 15 miles. I personally disagree with charging clients on the IRS rate. Basically you can take off the IRS rate from taxes, and add in the travel fees as income. The IRS rate is for the vehicle, not the person. What if you brought a VO with you, are you paying them window time or is that free and will be forever?
If you travel 200 miles, and charge $108 for it, that's what the IRS deems is the cost for the vehicle to travel, insurance, maintenance, gas, but you had a person in that vehicle for maybe 3 hours, how is the 3 hours compensated? Something like $40/hr both ways plus the IRS rate for miles. Or come up with a standard, like $60/hr travel all inclusive. You take some risk in case of emergencies, but is easier to sell as a base rate, non-flight service, which could also be non-flight fees for planning, processing, etc.
Now I am talking about midsized companies, not doing a one off real estate photo shoot. But say you got that job 100 miles away, and there is some emergency on the road, a boat exploded on the freeway, and you were stuck for 6 hours, ended up having to get a hotel and almost 2 full days of labor, for $108... That isn't fair to you, nor how most consulting/service companies work. Either they limit their distance, or they charge a fair amount (and often have a limited service area with no fees).
If you had a job, and your boss asked you to drive 2000 miles to a jobsite, taking several days each way, would you only charge him $.54/mile and skip any wage? Or would you expect to be paid for the time you took as well? Apply that to if/when you had employees (not 1099). They would expect their hourly wage for the drive, and where is the revenue for that?
It is all negotiation, if it means getting the job, that is also something really easy to waive as a line item which will get some purchasing agents to sign up, waive it, cut in half, whatever, it will help in negotiations. Once they value your work, you can then say you can no longer waive the fees.
My advice is from 20+ years in IT consulting, managing up to 25 engineers going to client sites from across the street, to completely across the country (overnights charged expenses as well, per diem and hotel fees). If you low ball your fees, then some clients will think you aren't good enough because you don't value your own time.
All above is my opinion, and do what works best for you. But I hope I added enough things to think about to make an informed decision. It is also dependent on what the competition is doing, and I don't mean Craigslist unless that's where you get your jobs from. If you win every job you quote, you are likely way undervaluing your service which is only good to gain market share,
Just a thought on this subject.......now that there are electric vehicles, ie. Tesla's, how can they possibly charge for gas mileage reimbursement? Would they get the same? I totally agree with you on charging a flat rate for travel time/hourly wage, all as one fee and don't separate it out as two separate items. Most people do not get paid for travel time, but like you stated, what if there is an accident, then what happens, your employee is gone all day sitting in his/her vehicle for hours.
It is not a gas mileage reimbursement, it is a mileage reimbursement. A lot of people called it gas mileage because the main expense they "see" on a trip is gas, but in reality the gas is only a small portion of it. It includes wear and tear on tires, brakes, engine/motor, insurance, maintenance, registration, and all costs associated with owning a vehicle. The mileage rate for the IRS is an average across the most common cars averaged across the nation.
In a car with 25MPG, at $3/gallon, for a 100 mile round trip you would spend $12 in gas, but would get $54 in reimbursement at IRS rates. Obviously there is a lot more in it than gas reimbursement. that money was never meant to be for salary or wage, it is for the vehicle alone, which is why normally only the vehicle owner gets that, and you don't get it at all in a company vehicle.
And most do not get paid for travel time? I don't know where or what industry you are in, but I have always gotten paid for travel, until I was on salary, then it was included in my salary package. I worked $10/hr jobs in moving and storage in CA, up to 6 figure IT jobs in Michigan, all paid my time while driving to and from jobsites (not the place of business). And if I drove my own vehicle, I got IRS rates on top, unless it was solely my decision to use my car, and a company vehicle was available. But my hours were always paid.
And just because you are self employed (as a lot of drone operators are) doesn't mean you have to eat those costs. Clients will pay reasonable fees, or I wouldn't want them as a client.
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