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Gas Pump Charges
You Could Be Overspending on Mileage Reimbursement
IRS building
1. The IRS Safe Harbor Rate is announced each December.
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2. The IRS Safe Harbor Rate has some drawbacks.
2. The IRS Safe Harbor Rate has some drawbacks.
The fixed and variable rate (FAVR) methodology, which calculates reimbursement rates based on an individual driver’s location and mileage-specific costs, is the only mileage reimbursement approach recommended by the IRS. FAVR recognizes that owning a car and driving that car incur different costs, and breaks reimbursement calculations into two separate cost categories. 

Like the IRS Safe Harbor Rate, FAVR reimbursements are paid tax-free under IRS Revenue Procedure 2010-51. This means that both employers and employees avoid paying taxes on the reimbursement amounts.
3. The IRS recommends FAVR.
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4. FAVR accounts for fixed and variable costs associated with owning and driving a car for business.
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5. The benefits of FAVR.