Mileage Reimbursement for locum tenens physicians? Not a good idea.
Locum tenens physicians sometimes ask for mileage reimbursement for assignments in which they drive their own vehicles. Here are 3 reasons this is a bad idea. 1. Locum Tenens physicians operate as independent contractors (ICs), not employees. Traditionally, mileage reimbursement plans offer the Federal standard mileage rate reimbursement for travel to and from the job site using one’s own vehicle and are reserved for employees, not independent contractors. Most companies reimburse employees who operate their personal automobile on the job, not ICs. In a traditional common law model, a true IC is an independent business responsible for his/her own expenses, including mileage and travel. When you pay a locum physician mileage expenses (or any other reimbursement for expenses, supplies and equipment expenses) you have begun to slide down the slippery slope to misclassification. 2. Asking for a mileage reimbursement is like asking if you can pay more taxes- IRS says: “YES PLEASE!”. There are two ways in which you can expense travel, the standard mileage deduction method, and the vehicle expense method. Once you choose to accept a mileage reimbursement, you are stuck using the standard mileage rate method, which offers a much, much lower expense potential, especially if you have already been reimbursed for the mileage (there are a couple scenarios where you can switch back and forth-talk to your accountant and do your own research) Physician tax rates for 2015 are between 25% and 33% depending on income level and marital status 2015 tax table. 25% of 57.5 cents/mile is 43.12 cents/mile. Question to ask yourself: “Is the 43.12 cents per mile putting more money in my pocket than the taxes I will avoid paying if I were to deduct the actual cost of using my car for business, plus depreciation. This requires much more record keeping, but it can result in a significantly larger deduction. If you use this method, you must keep careful track of all the costs you incur for your car during the year, including : gas and oil repairs and maintenance depreciation of your original vehicle and improvements car repair tools license fees parking fees for business trips registration fees tires insurance car washing lease payments towing charges auto club dues 3.