Is your employer fully paying the cost of driving for work?
If you're driving your car for work in Philadelphia, there's a good chance your mileage rate isn't keeping up with your expenses.
A study from Runzheimer, which provides vehicle reimbursement data used by the IRS to suggest mileage rates, found that Philadelphia had the second highest average monthly cost, $929.17, to operate a vehicle for work among major American cities. Only Detroit has a higher rate, the study found. The IRS issues each year a recommended mileage rate. The rate in 2016 is 54 cents per mile. The average cost of driving a sedan for work in Philadelphia is about $30 a month more than would be covered by the federally recommended rate.
Nationally, the IRS rate is estimated as a bit too high, Runzheimer found, giving the average American worker several hundred dollars a month more than the actual cost of operating a vehicle. About 10 to 25 percent of American workers have to drive for their jobs.
Just because the IRS recommends 54 cents a mile doesn't mean that's what employers have to pay. In Philadelphia employers may well take into account the greater cost of driving and will up their reimbursement to match it. But there is the possibility the city's employers are using the IRS rate, and underpaying its workers' costs.
"I think our conjecture is people are probably using the IRS rate and then individuals could be under reimbursed because of that," said Dave Olson, Director of Business Vehicle and Expense for Runzheimer.
The company had some suggestions for workers who feel their reibmursements aren't commensurate to the costs of driving.
"Start by talking with your direct manager and sharing your logic," said Heidi Skatrud, Senior Vice President of Operations and Product Management. "Also consult with your tax advisor to determine if you can qualify for additional deductions on your personal income tax return."
The Runzheimer data did not explore how many Philadelphia employers were reimbursing the full operating costs of driving for work.
Cities tend to be more expensive to drive in, Runzheimer staff said. There's more stop-and-go traffic, more wear from rough roads and gas tends to be more expensive. But even compared to other big cities Philadelphia is pricy. Insurance is the biggest driver of that.
"Vehicle insurance rates are higher and according to our numbers are probably twice the national average," said Skatrud.
The Runzheimer study took into account vehicle insurance rates, costs of purchasing or leasing, fuel prices and maintenance costs for a male driver, 25 or older, with a sedan.