Many professionals and businesses make reimbursements when employees pay out money on behalf of the company they work for. Properly arranged reimbursements result in that money being transferred to the employee tax-free, with expenses also deducted on the business side.
Unfortunately, without a proper plan in place, the IRS may view these reimbursements as wages, which are fully taxable. Though not required by the IRS, an "accountable plan" substantiates the nature of deductible business expenses through proof such as receipts and credit card bills.
The plan also verifies that excess advances made toward the business expenses were returned to the company within a reasonable time frame (30 days). If either substantiation or reimbursement does not occur in a timely manner, the IRS can invalidate the plan for not following the rules. It thus makes sense to set in place a system of expense reporting with documentation that clearly documents all elements needed to prove any expense to the IRS.
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