End of Year Mileage Calculations in Microsoft Dynamics® GP Human Resources and Payroll

End of Year Mileage Calculations in Microsoft Dynamics® GP Human Resources and Payroll

As we are approaching the final quarter of the calendar year, payroll personnel begin to look at items that may impact the W-2. One such item is mileage calculations. Mileage can be paid or taxed in various ways depending on the reason for the transaction. The most common reasons are reimbursement for business use of a personal vehicle and taxing the personal use of a company vehicle. When you need to reimburse an employee for business use of personal vehicle, Microsoft Dynamics® GP Human Resources and Payroll can handle this in a couple of ways. An Accounts Payable transaction can be generated for the expense item and subsequently paid. The other way to handle it is through the Payroll module. A pay code can be created with a Pay Type of Business Expense. This is typically not Subject to Taxes so the boxes in this section would usually be unchecked. A transaction is then entered through the Payroll Transaction entry window and the employee will be reimbursed when that batch is processed. The other type of mileage is that which, according to the Internal Revenue Code, is taxable because there is personal use associated with a company vehicle. Publication 15B from the Internal Revenue Service discusses the various ways to calculate and tax this fringe benefit. Methods include the Cents-Per-Mile Rule, the Commuting Rule or the Lease Value Rule. Once the taxable benefit has been determined, Mileage can be set up as a Benefit Code in the Microsoft Dynamics® GP Human Resources and Payroll Module. In this case the section for “Subject to Taxes” will need to be marked for the appropriate taxes to be withheld. Microsoft Dynamics® GP Human Resources and Payroll will then include this benefit cost in the Gross Wage calculation for the appropriate taxes only. Talk to your tax advisor for the proper taxes to be withheld for this benefit code. Often times, the organization wants to minimize the impact of a taxable situation on the employee. One way to do this is by performing a “gross up” on the final amount. This is often done for the top executives in an organization. Integrity Data’s Paycheck “What If” Calculator can assist the user in performing this task prior to running their actual payroll. In addition, it can help in other situations where an employee wants to know the impact to their check if they make changes to their benefit/deduction selections or their tax exemptions. In conclusion, mileage is an important calculation that often waits until year end to be done. Proper use of a taxable benefit code or in some cases the use of a Gross Up calculation can make these transactions much easier to conquer. 

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