All About Mileage Reimbursement

By Jaynie Fawley

Welcome to the wonderful world of nannying! Every professional nanny has a first nanny position listed on their résumé, and most have experienced at least one situation where they learned something new about industry standards and had to advocate for themselves in a current or next position. For many nannies, that includes addressing the IRS mileage reimbursement rate with their employers.

The federal mileage reimbursement rates are set and defined by the IRS each December for the following year, and these standardized rates are used to reimburse individuals for the costs of operating their personal vehicle for business, charitable, medical, or moving purposes. For 2023, the IRS reimbursement rate is 65.5 cents per mile for all miles driven in a personal car for business use.

Nannies who are required to use their personal vehicle to accomplish their work duties are entitled to ask for reimbursement for every mile they drive while on duty, with or without children in their car. Mileage reimbursement does not cover a nanny’s commute to and from work, but it kicks in when transporting children to and from school and activities and whenever the nanny runs errands for their employers, like grocery shopping, dropping off dry cleaning, running to the post office, and so on.

Now let’s talk about how the IRS determines their rates and what they are intended to cover. The IRS mileage reimbursement rate for business use is based on an annual study of the fixed and variable costs of operating a vehicle. The IRS uses that information to set a standard per-mile rate that is intended to cover all costs incurred when driving one’s personal car for work use. The variable costs the rate covers are the cost of gas, oil, tires, maintenance, and repairs, and the fixed costs are the cost of insurance, registration, depreciation, and lease payments.

So, not only does the IRS rate cover far more than just your gas, but it is also intended to compensate you for the wear and tear of transporting children in your car (muddy seat backs and goldfish crumbs literally everywhere sound familiar?), more frequent oil changes and tire rotations, and general upkeep as needed to keep your car running in top condition for the safety of yourself and the children. Just as importantly, the IRS rate is intended to help cover the costs of your annual vehicle registration and your auto insurance, including covering the cost of a business rider if your state requires it (this varies by state, so if you don’t know if you legally need to have a business rider to be insured when driving for business use, call your insurance agent and ask!)

It’s important to point out that federal law does not currently require employers to reimburse employees directly for mileage, and only a small handful of states legally require employers to use the IRS reimbursement rate. That said, it is still best practice in our industry for employers to offer their nannies the IRS mileage reimbursement if they require their nanny to use their personal vehicle to transport children.

It is absolutely within your rights to ask your employers to honor the IRS rate, emphasizing to them that mileage reimbursement is fundamentally intended to cover more than just gas. If they’re not willing to budge and insist that they’re only willing to reimburse at a lower rate, only you can decide if you feel comfortable moving forward, especially as some reimbursement is better than none. Since paying the IRS rate is considered optional from a legal standpoint, your employers can technically offer a lower reimbursement rate or other means of reimbursing, but this agreement should feel fair, appropriate, and sustainable long term.

Let’s discuss other popular options for reimbursement that don’t follow the straight “miles × rate = cash” formula. In best practice, each option will keep the current IRS mileage rate in mind when deciding reimbursement amounts. Some families may choose to pay their nanny a higher hourly rate to compensate for mileage, but both parties should be aware that this additional income is taxed on both sides. Some families have the nanny fill their gas tank with the family debit card twice each week or will load a large chunk of funds onto a gas station gift card for the nanny to use. Another common option is paying the nanny a weekly mileage stipend, which is a flat rate per week based on an average of miles driven (e.g., an extra $100 per week to cover an average of 150 miles driven weekly). Or, to avoid the need for mileage reimbursement altogether, the family always has the choice to provide a vehicle for the nanny to use while on duty. The key is, again, that the agreement you reach feels like appropriate compensation for using your personal vehicle at work.

When you address mileage reimbursement with your employers, be prepared and stay professional. Provide information about the IRS rate and what it’s intended to cover, and let them know how you would prefer to have mileage reimbursement handled going forward. Whether you accept the rate they offer, negotiate for a higher rate, or compromise on a different means of reimbursement that feels fair, make sure you have this agreement added to work your work agreement. Include all of the terms for reimbursement, including how you will track miles (a physical calendar, a shared Google doc, in an app, etc.), how often you’ll turn them in for reimbursement, and how the reimbursement will be paid. If you find you’re not able to meet a fair compromise with your employers, you may have to decide whether it’s best for you to stay committed to the family, or if it’s best to find a new position where industry-standard benefits like mileage reimbursement are included as a matter of course.

Whatever the outcome, be proud of yourself for doing your research, seeking advice, and having hard conversations with your employers. You deserve to be treated as a professional nanny and valuable employee, and being empowered to advocate for yourself will ensure that you are treated well throughout your nanny career.

Jaynie Fawley is the founder of Michigan Nanny Solutions and is currently celebrating ten years of providing professional solutions for nannies and families in West Michigan. As a placement agency owner, Jaynie strives to elevate the nanny industry by establishing realistic expectations and professional standards for nannies and their employers, and she accomplishes this by providing education, advocacy, and empowerment to the nannies and families in her community. Jaynie’s success rate in introducing local families to professional nannies for long-term, mutually beneficial employment relationships is a source of great pride. Jaynie’s vision is an industry where every nanny is paid fairly and legally, receives standard industry benefits, and forms long-term relationships with families who truly like them and value them, both as professionals and as people.

As a professional career nanny with sixteen years of experience, Jaynie has spent the past twelve years working as a nanny with the same amazing family, though nowadays you’ll mostly find her running her two nanny girls to and from school and other activities (she is no stranger to mileage reimbursement!) She also knows firsthand how life changing it can be to have a nanny who loves and is fully invested in your family long term, and she works hard to recreate this magic with every nanny and family she represents.