Cash Flow Planning for Life

Most employers reimburse employees for expenses incurred away from the office on business travel.

This is the final part in my 7 part series “7 Things Every Small Business Owner Needs To Know”.  You can download this entire series in my eBook on my web site – www.Makara-Assoc.com.

These reimbursements are allowed but are treated differently to the employee whether an accountable or non-accountable plan is in place.

If the employer has an accountable plan the expense is deducted 100% by the employer.

If the employer has a non-accountable plan, the reimbursement is treated a taxable wages to the employee and reported in box 1 of the employees W-2.

The employee then must take any allowable deduction on his or her personal 1040; these expenses would be subject to the 2%-of-AGI limitation on their schedule A.

All business owners should review their plans to insure compliance with an accountable plan to save on the tax burden to the employee and employer when a company is deemed to be using a non-accountable plan.

I’ve worked with business owners across the United States in resolving these questions and improving the accounting function of their businesses.

If you have any questions about travel and uniform reimbursement policies – please give me a call at (239) 384-9688 or visit my web site at: www.Makara-Assoc.com.

– Mark

This information is based on facts, assumptions and representations as stated and authorities that are subject to change.  We will not update this information for subsequent legislative or administrative changes of future judicial interpretations.

LEGAL NOTICE AND DISCLAIMER:  The information within this eBook is for informational and educational purposes only and is not tax advice and should not be used as such.  The facts of each individual situation can have significantly different outcomes when applying tax law.  The hiring of a CPA is an important decision not to be based solely on advertisements.