Step-by-step · 3 min read
Mileage reimbursement plan
When you drive your own car for your S corp, the company can reimburse you at the IRS standard mileage rate. You receive the money tax-free and the business deducts it.
- Who it fits
- S corp owners who use a personal car for business.
- Figures
- 2026 tax year
The key rule
The same accountable plan rules as the home office: a written plan, a mileage log and timely reports.
How it works
If you deduct business miles on your personal return as an S corp owner, you generally cannot: employee business expenses are not deductible on a federal return. Reimbursement solves that. The S corp pays you for the miles, deducts the payment, and the money is not wages to you as long as the plan follows the accountable plan rules.
3 steps
Add mileage to your accountable plan
One plan can cover home office, mileage, phone and other expenses.
Keep a log
Date, purpose, start and end points and miles.
Reimburse on a schedule
Submit the log monthly or quarterly and pay yourself miles × the IRS rate.
Example
A quarterly reimbursement
You drive 2,400 business miles in a quarter visiting clients and suppliers. You submit your log, and the S corp reimburses 2,400 × the IRS rate. At a rate of around 70 cents, that is about $1,700 for the quarter, deducted by the S corp and tax-free to you.
Common mistakes
- Reimbursing a flat monthly car allowance without a log makes it taxable wages.
- Reimbursing commuting miles from home to your regular office.
- Claiming both reimbursement and actual car expenses for the same vehicle.
Key dates
- Within about 60 days
- Submit each trip in your log.
- December 31
- Reimburse the year’s miles before year-end so the S corp deducts them this year.
Questions we hear
Can I reimburse electric vehicle charging instead?
The standard mileage rate already covers fuel or charging. Use the rate, or use actual expenses, but not both.
Does my home count as a business location?
If your home office is your principal place of business, trips from home to clients are business miles, not commuting.
General education for TaxSquad clients, not advice for your situation. Rules and figures change. Talk to us before acting on this guide.