In an offer letter it states that I will be reimbursed for drive time (4hrs per week), milage (50.5 cents per mile), and also gas (just turn in a copy of my receipts). Is this legal? It sounded like a great idea at the time, but am i missing something? Thanks.:confused:

Taxability maybe. The current maximum IRS rate for qualified expense reimbursement is $0.505 per mile. Even if you otherwise qualify for mileage reimbursement (accountable plan rules), any reimbursement past the IRS maximum rate is fully taxable wages.
http://www.irs.gov/newsroom/article/0,,id=176030,00.html

Drive time wages are taxable if paid.

Looks like the problem here is that the company is offering to pay the IRS mileage rate PLUS actual gas expenses. The IRS rate is supposed to include the gas, so I figure they will disallow the gas expenses. The company should not be deducting both as expenses and the amount above and beyond the allowed rate will be taxable income to the employee.

In reguards to my situation, wouldn't I pay taxes on everything anyways? I'm getting taxed on my drive time (4hrs), gas ( about $100.00), and they also reimburse meals (about $50.00). They pay for hotel from their corporate account. This is weekly, so before it really adds up, am I paying double tax, involved with a company claiming fraudulent expenses, doing something illegal whether it be breaking frederal or state law? Thanks.

In reguards to my situation, wouldn't I pay taxes on everything anyways? I'm getting taxed on my drive time (4hrs), gas ( about $100.00), and they also reimburse meals (about $50.00). They pay for hotel from their corporate account. This is weekly, so before it really adds up, am I paying double tax, involved with a company claiming fraudulent expenses, doing something illegal whether it be breaking frederal or state law? Thanks.

The drive time, even if not legally required, is wages and taxable by FICA, FIT. As I recall, Texas does not have a state income tax, so the wages won't get tagged for that, at least.

Gas won't be taxed. It is a reimbursement.

Meals might be taxed, but it has been a long time since I dealt with this. I think the company can deduct 50% of the meal expense. I have no idea how that affects the employee.

I don't see that the prospective employer is out to put the screws to you.

Wages are always taxable. It does not matter what they are called. Drive time wages are legally the same as ____________ wages (fill in any blank you want).

Expense reimbursement however is complicated. Expense reimbursement is not necessarily (or certainly) non-taxable. For any expense reimbursement to be non-taxable, the Accountable Plan rules must be followed. This includes Business Purpose, Substantiation, Return Excess Amounts and Reasonableness. If any of those tests fail, then we have a taxable transaction. In the case of mileage, there is a very specific IRS rule involved. The IRS mileage rate is what is called a "safe harbor" method. The employer could try to track all actual costs of driving the car (and this is very complicated) or they can just use the safe harbor method (mileage). There is no law that says that the employer cannot pay more then the IRS maximum, it is just that a taxable transaction occurs if they do. Take it a step further, fail the Substantiation rules, and the entire payment becomes taxable.

On last thing. I have worked for some pretty big companies and the number of HR people working in the Staffing group I have who really understood the IRS expense rules was a really small number - like maybe zero. Staffing and HR do not pay people. Someone in Accounting does, and the someone in Accounting probably knows what they are doing. By the same token, the Staffing people know things specific to their jobs that accountants do not.