I have a question related to what rate to reimburse a volunteer who used their personal vehicle for a trip to take some of the youth group on a retreat. The mileage was close to 500 miles. They preferred reimbursement rather than claiming it as an itemized deduction on their tax return.

From what I have found, I believe it should be $.14 per mile, same as if they were not being reimbursed and only claiming it on their tax return. A few board members disagreed with me (believing it should be $.54 because of the wear on the vehicle, etc) and one asked a CPA. The CPA's response is below. I agree with a lot of what they say, except that it doesn't matter if they are a volunteer or an employee (then what would be the point of the IRS breaking out rates for charity vs employee??).

Questions from other board member (he used $.17 because I accidentally said $.17 at the last board meeting):

I have a question for our church.

The IRS allows $.17 a mile deduction for volunteer work and $.54 a mile for employee driving reimbursement.

If a volunteer drives their personal vehicle to a camp, training, or other function, how much can the church pay them in reimbursement?

If an employee of the church drives their personal vehicle to a camp, training, or other function, how much can the church pay them in reimbursement?

Response from CPA:

The 17 cents a mile is what you can take as an itemized deduction if paid nothing for volunteer driving. However, the church is certainly allowed to pay 54 cents per mile to anyone who has driven legitimate church business miles. In other words, if the church wants someone to drive themselves or others somewhere on church business (attend conference on behalf of the church, take youth to function, etc), that mileage can be reimbursed at 54 cents per mile. It is not taxable income to the recipient – merely reimbursed business miles. There is no difference whether it is an employee or not. The key is it is recognized business miles requested by the church in its mission to carry out church business. If there is NO reimbursement, then the non employee taxpayer is limited to 17 cents per mile deduction on their federal return, and NO deduction on Pa/local. If NO reimbursement, the employee is entitled to take 54 cents per mile as an employee business expense, but in reality there would end up being no deduction federally – because off the 2% floor limitation, and a very small benefit on PA and local. I always suggest that the church pay out the maximum federal rate on business mileage, if possible. The driver can then donate a portion back if desired. If it is legitimate church business function, then why should the person – who is already donating their time – also be asked to bear the vehicle costs? Likewise – I absolutely advocate that employees should ALWAYS be reimbursed at the federal rate. It seems unfair to me to expect an employee to use their net paycheck to run around doing church business – visitation, getting church supplies, traveling to church functions like conferences, etc.

Thank you to all who provide advice.

Also...if we would reimburse more than $.14, the amount exceeding $.14 should all be counted as taxable income? Is the Correct?