Employee Reimbursements-Accountable vs Non-Accountable Plans
As a tax preparer and payroll provider for my clients I always recommend, whenever possible, that they keep employee reimbursements’ out of payroll. The IRS even suggest this in Publication 583 (https://www.irs.gov/pub/irs-pdf/p583.pdf). If it is your habit to include reimbursed expenses in employee paychecks and your payroll is ever audited, be it from the IRS or the State, I am sure you and your employer could be very unhappy. In a perfect world, all expenses would be paid with company checks, or credit cards, leaving a clear path for accounting to identify the source and business reason for each expense. However, we do not live in a perfect world, and it is oftentimes necessary for employees to pay for these expenses. Reimbursements are not so cut and dry. If you…
