Mileage Tracking on the Honor System? You’re Probably Overpaying
Jessica Packard
Last update on:
October 6, 2025 8:35 AM
Published on:
TL;DR
Using an honor system for mileage tracking is risky business. With no way to verify where your employees have traveled during the day, you may end up overpaying or even underpaying employee mileage.
Mobile mileage tracking solutions like Timeero use GPS technology to capture accurate mileage, helping you issue fair and compliant reimbursements.
Mileage logs based on an honor system sound nice and simple, but they’re costing you more than you think.
When workers round mileage, forget to deduct personal travel from mileage logs, or rely on their best guess, business losses are bound to happen. Without verifying the accuracy of employees’ mileage claims, you not only risk running into payroll errors, but increase the likelihood of audit-related penalties and fines imposed by the IRS.
In this guide, we’ll explore why relying on the honor system for mileage tracking costs your business more in the long run and how Timeero’s GPS technology helps you avoid inaccurate and inflated mileage reports.
The easiest way to track business miles is here.
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Although using the honor system for mileage tracking makes things easier for your employees, when mistakes happen they carry a lot more weight.
Below are three reasons why using the honor system for mileage tracking usually fails.
1. Employees round mileage or forget details
Many employees take advantage of the fact that you can’t verify their actual mileage. Instead of reporting the exact number of miles traveled, employees might round up their mileage to the nearest whole mile. What might seem like a small number at first, adds up quickly if repeated multiple times throughout the week.
2. Personal mileage and business travel are mixed together
Personal mileage is not tax deductible. This is why it is so important for your business to have a system in place that separates personal commutes from business travel. If personal mileage makes it to payroll, not only are you reimbursing employees for non-work related travel, but you risk being fined during an audit.
3. It’s difficult to verify the accuracy of mileage records
Manual mileage logs leave no way for managers to cross-check actual travel against mileage claims. Not only are spreadsheets and paper tracking sheets easy to alter, but they don’t show the employee’s driving route which plays a major part in mileage verification.
The cost of inaccurate mileage
Inaccurate mileage tracking creates several problems for your business. Namely, high overpayments, excessive administrative burden, and increasing mistrust between employee and employer.
Overpayments add up quickly
If one of your employees rounds up their daily mileage by three miles, the cost per year can be pretty heavy.
Let’s do the math.
3 additional miles x 20 work days = 60 miles/month
If this happens for a whole year, you’re looking at a total reimbursement of $504.00/year for one employee.
What if you had ten employees doing this same thing? You end up paying an extra $5,040 every year in mileage reimbursements alone.
Excessive administrative burden
Aside from the cost of overpayments adding up, an honor system can create more subtle costs by requiring admin teams to work additional hours to correct inaccurate mileage logs and piece together data to verify accuracy.
Increased mistrust between employee and employer
A recurring lack of accuracy can also create tension between employees and their managers. If it goes on for too long, managers will feel like they have to police their employees, and workers will feel like they’re always being monitored. This type of culture can gradually erode trust and lead to a drop in efficiency.
Real-world examples
Inflated mileage reimbursement affects multiple industries, but it is seen and felt the most by those that require employees to drive as part of their job.
Here are 3 real-world examples of how mileage log accuracy can be affected in different industries, and the long-term impact this can have on your business:
A caregiver forgot to track their mileage between patients and submits an estimated 20 miles for travel. They are then reimbursed for the inflated number instead of the actual 10 miles that were driven. The health care agency ends up overpaying for miles that were never traveled.
A sales rep forgets to subtract their commute mileage from their total trip mileage and bills their employer for the entire round trip. When the business compensates the driver for commute mileage, they are now required to pay payroll taxes on that amount.
A construction crew member estimates their weekly mileage instead of recording trips as they happen. Not only are the mileage logs inaccurate, impacting business profits, but the crew member will either be overpaid or underpaid, leading to employer-employee disputes.
The solution = Timeero
Timeero automates mileage tracking for mobile teams through its GPS tracking technology. The app captures employee mileage in real time so you don’t have to worry about inflated or inaccurate mileage logs.
Here are some of the key ways Timeero eliminates the guesswork associated with mileage tracking and creates more trustworthy records.
✅ Delivers fair and accurate reimbursements
With Timeero there’s no way for employees to pad mileage or submit inflated mileage logs. The app automatically captures employees’ mileage as soon as they hit ‘start’ on the mobile timeclock. Every mile is logged with GPS precision, and driving routes can be reviewed to verify mileage claims against actual travel.
Timeero’s mobile timeclock
As a business owner, Timeero helps you confidently issue accurate and fair mileage reimbursements.
Curious how easy mileage tracking can be? Experience it firsthand with our interactive demos for Android and iPhone.
✅ Reduces payroll and admin workload every pay period
If your company employs mainly mobile workers, you understand just how much time goes into running payroll each week. Revisiting data every pay period just to correct errors is not only a waste of valuable company time, but one of the fastest ways to lose profit.
Timeero simplifies payroll by reducing the amount of mileage related errors with GPS-verified mileage records. HR teams can generate mileage reports for individual employees and export the data directly into their payroll system for expedited payment.
✅ Builds trust in the workplace through transparent records
Timeero’s GPS-verified clock-ins and automated time and mileage tracking ensure that work is performed in permitted locations and employees can’t inflate their hours worked.
Automated and transparent trip logs will give everyone a single, objective source of information to work from, and reduce the frequency of “he said / she said” disputes between workers, managers, and other members of your team.
When employees can see what’s tracked and managers have easy access to original data, disputes will drop off and your whole business will become more cohesive and efficient.
✅ Provides peace of mind with compliant-ready records
Timeero’s mileage records capture the data you need to be compliant with the IRS.
With Timeero, you’ll equip yourself with timestamped, trip-by-trip records that align with the IRS’s requirements on adequate, timely records. The IRS Publication 463 requires mileage records to have specific details on work travel such as date, origin and destination, business purpose, and miles. These are all elements that are included in Timeero’s mileage reports, helping you reduce your audit risk and keep reimbursements tax-friendly.
Solving your honor system problems with automated GPS tracking
Inaccurate and inflated mileage claims are a problem for countless businesses, regardless of industry or size.
With Timeero’s GPS tracking technology, your business can increase the accuracy of mileage reports, gain access to audit-ready records, and simplify payroll each pay period.
Stop overpaying for mileage and start tracking miles the easy way with Timeero. Start your 14-day free trial today.
FAQs
Why is using the honor system for mileage a problem?
The number one problem businesses face when using the honor system for mileage tracking: employees knowingly falsifying mileage claims. Inaccurate mileage records either result in overpaying employees for miles never traveled, or underpaying employees for mileage that should have been recorded and submitted.
How does inaccurate mileage affect my business?
Inaccurate mileage tracking poses several risks for your business, namely overpaying employees for mileage, creating additional work for admins, and increasing the risk of IRS audits.
How can I stop employees from inflating mileage?
First, establish clear company policies regarding mileage tracking. Be sure to specify which types of travel should be included in mileage reports. Additionally, adopt and introduce a mobile mileage tracking solution like Timeero that eliminates mileage rounding and expensive guesswork.
How does Timeero save money on mileage reimbursements?
Timeero uses GPS tracking technology to capture mileage in real time. Mileage records are attached to employee timecards, which can be easily downloaded and exported for payroll. Timeero also integrates with several popular payroll providers, expediting the speed and accuracy of mileage reimbursements.
Switch to Timeero's easy tracking and watch your savings grow.
Jessica Packard is a B2B SaaS content strategist lead who helps companies turn SEO and content into real growth. With a mix of creativity and data-driven thinking, she builds strategies that drive traffic, generate leads, and make content a core part of the business.
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