Hi...

What is the legal proper way per Ohio for the following scenario...I work in home health as a staffing/client coordinator. Instead of being paid the 50.5 cents per mile that the other caregivers are paid, my employer pays me $50 a month for mileage reimbursement. This reimbursement is shown on my paycheck under the category of "other" and is reported as taxable income. I was under the impression in the state of ohio, that mileage reimbursement is NOT a taxable item in Ohio. Could someone please clarify this for me...Thanks...:confused:

There is a federal law called the Internal Revenue Code (IRC). This law does not require expense reimbursement but does contain the rules for the taxability of payments. For an expense reimbursement to be non-taxable, the payment must follow the accountable plan rules. Your $50 payment monthly fails these rules. No effort is being made by the employer to keep track of each trip and substantiate these trips. This is what makes the payment taxable. This is a federal rule and it is not possible for any state to make this rule go away.

Mileage rate reimbursements can be non-taxable assuming that the accountable plan rules are followed. This would include documenting the mileage and business purpose for each trip and making sure that the reimbursement does not exceed the federal maximum rate. This is discussed in a lot more detail in IRS publication 463 (Travel, Entertainment, Gift, and Car Expenses).