We have been fielding some phone calls from employers and nannies concerning mileage reimbursement recently.
The IRS establishes annual maximum mileage reimbursement levels, generally in November before the tax year begins. The current maximum tax free mileage reimbursement rate is 51 cents per mile. This figure is intended to consider not only the cost of gasoline, but also depreciation and maintenance expenses.
Most families use the IRS rate to calculate nannies' mileage reimbursement when nanny uses her personal vehicle to transport her charges.
In the last 20 years, the IRS has done a mid-year adjustment only one time, after Hurricane Katrina.
Families are free to increase the rate at which they reimburse mileage - however, any amount in excess of 51 cents per mile is considered taxable income to the nanny. HomeWork Solutions closely monitors the maximum mileage reimbursement rate and will report immediate should the IRS take any action to change the 2011 rates.
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