S Corp Mileage Reimbursement: Paying Yourself $9,366 for Your Own Car.

A one-owner S corp in its third year. The owner drives a personal truck to job sites, to the supply house, to the bank, about 12,600 business miles in 2026, and has never been paid a dollar for any of it. S corp mileage reimbursement doesn't show up anywhere on the tax return, which is most of why it gets skipped. It is a payment the corporation makes during the year, and this year those miles are worth $9,366.

An S corp owner is an employee of their own corporation, and an employee's unreimbursed business expenses were a miscellaneous itemized deduction. IRC §67(g) suspended those beginning in 2018, and the One Big Beautiful Bill Act made the suspension permanent, carving out only eligible educators. So the miles you drive and never get paid for are worth exactly nothing on your 1040. There is no line left to put them on.

What is left is IRC §62(c) and Treas. Reg. §1.62-2, which let an employer pay an employee for business expenses with no tax consequence on either side. Three things have to be true. The expense has a business connection under §1.62-2(d). You substantiate it to the corporation under §1.62-2(e), which for a vehicle means satisfying IRC §274(d). You return any unsubstantiated advance under §1.62-2(f). Miss one of the three and §1.62-2(c)(5) treats the entire payment as nonaccountable, which means wages, withholding, and both halves of FICA.

Start with the plan. The regulation describes an arrangement, not a document, so nobody can point you to a sentence requiring you to write it down. Write it down anyway. It runs about a page, adopted before any money moves: the company reimburses employees for substantiated expenses incurred on its behalf, mileage at the IRS business standard rate then in effect, expense reports due within 60 days, unsubstantiated advances returned within 120 days. Those last two numbers are the fixed date safe harbor in Treas. Reg. §1.62-2(g)(2)(i), and matching them is how you avoid arguing about what a reasonable period of time means.

Then the log, which is the part that actually fails. A car is listed property, so IRC §274(d) makes the records a condition of the deduction rather than evidence supporting it, and an examiner holding no log is not obligated to allow a business percentage they find believable. Treas. Reg. §1.274-5T(b)(6) wants four things per trip: the mileage, the date, where you went, and the business purpose. Any phone app that records the drive and lets you tag it clears all four. Take an odometer reading on January 1 and December 31 too, because total miles are what turn business miles into a percentage.

Then the money. The owner submits a report once a month, and the corporation writes a separate check against it and books it to an expense account. Not through payroll, and not to shareholder distributions. Done that way the payment never touches the W-2 or the Form 941, and the corporation deducts it like any other cost.

The gap between the first column and the second is $3,381 out of the owner's pocket, plus $716 of employer payroll tax the corporation had no reason to pay. The third column is the one I see most often. The owner knows the driving is worth something and takes the money, and the bookkeeper codes it to distributions. The cash gets out, but no deduction follows it, so the $9,366 is still sitting in K-1 income in April.

One wrinkle belongs to this year. 2026 runs two rates. Notice 2026-10 set 72.5 cents in January, and Announcement 2026-11 raised it to 76 cents for miles driven on or after July 1. A plan written to pay the IRS business standard rate then in effect handles that by itself. A plan that typed 72.5 cents into the text is underpaying the second half by 3.5 cents a mile, $231 on these miles, and that can be trued up before December 31.

Driving from home to a regular work location is commuting, and commuting is personal. Rev. Rul. 99-7 is the ruling, and the exception that matters to a one-owner S corp is the first one: when your home office qualifies as your principal place of business under IRC §280A(c)(1)(A), trips from there to other work locations in the same business are business miles. When the shop or office is somewhere else, the drive to it is commuting no matter how early you leave.

This decides more of the number than the rate does. An owner with a real home office logs nearly every mile as business. An owner with a shop across town loses the largest single block on the odometer. And reimbursing commuting miles does not fail quietly, it turns that slice of the payment into wages. If the home office is what's carrying your mileage, make sure it is reimbursed and documented as one, which I worked through in the S corp home office accountable plan.

You can still pay yourself for 2026 miles. Treas. Reg. §1.62-2(g)(1) asks for substantiation within a reasonable period of time, and the 60-day fixed date method is one certain way to meet that, not the only way. Adopting the plan in November and running ten months of a clean log through it is defensible, and I would rather see that than another year of nothing.

Prior years I would leave alone. There was no arrangement in 2024, nothing was substantiated inside anything resembling a reasonable period, and a 2026 check for 2024 miles fixes neither problem. Reviewing several years of returns for a new client, the pattern is nearly always the same: the small errors are not worth amending, and the real money is in the deduction nobody ever claimed. Here that is $9,366 a year, repeating.

People usually ask this in the other order, so worth saying plainly: none of this applies if the truck is titled to the corporation. That is a different and generally worse set of rules, which I priced out in personal use of a company car. For most one-owner S corps the cheaper answer here is also the one with less paperwork, which is not usually how this goes.