Accountable Plan

A plan used by a business to reimburse its employees for expenses they incur for work purposes. For example, an employee on a business trip may be required to pay for a hotel room with his/her own money and later receive a reimbursement. Under an accountable plan, the reimbursement the employee receives is not included in his/her income. Because it is not part of one's income, the reimbursement is not a tax write-off, which is why the accountable plan was devised.

Accountable Plan

A plan for reimbursing employees for expenses such as meals, entertainment, travel, and transportation incurred for business purposes on behalf of the employer. A plan is an accountable plan if the employer requires the employee to adequately account for all business expenses and to return any excess reimbursements. For employees under an accountable plan, reimbursements aren't entered on the tax return as income and the expenses aren't deductible.

References in periodicals archive ?

Your best tactic then would be to request reimbursement by your company--specifically under an accountable plan. (See Trusted advice.) Then, you would get cash back without having to report taxable income, and the company would get a business deduction.

New rules for business travel deductions

Going forward, employers can help their employees by implementing an accountable plan to reimburse them for their business expenses, including home office.

Keeping Your Balance: Home office deduction

If the employer's payments are made in accordance with what the IRS calls an "accountable plan," which generally requires employees to substantiate all reimbursed expenses and return any advances in excess of expenses incurred, "the business can deduct the payments made under the plan for federal income tax purposes, although meal reimbursements are still subject to the 50 percent disallowance," he said.

Under the wire As year ticks down, CPAs say there's still time for last-minute moves

Rather than a taxable bonus, you could ask your employer to create an "accountable plan" that reimburses you for business expenses.

Working remotely from a home office? You just lost a tax break

Does the company use the per diem method to reimburse employees or the accountable plan method?

Travel Pay: Handling It Correctly 2018

An owner-employee can obtain reimbursement for the costs of a home office under an accountable plan; the costs of the home office become deductible by the corporation, while the owner-employee is not taxed on the reimbursement.

Starting a business from home: legal, tax, and financial concerns

But when the employer makes these payments under a so-called "accountable plan," they're free from federal income and employment taxes for recipient employees.

How accountable plans save employers when reimbursing employees: basics for tax-favored expenses vs. taxable compensation

Amounts paid to an employee under an accountable plan for tickets to a sporting event must meet several conditions, in addition to the usual accountable plan requirements, to be deductible as a business expense by the employer.

Deducting tickets to sporting events

Most employers take advantage of the accountable plan rules to deduct travel and entertainment expenses.

Deducting expenses for sporting events under an accountable plan

This program improved outcomes and behaviors: Meetings started and ended on time, had a defined purpose and the right people were in attendance; meetings stayed on topic and participants developed an actionable and accountable plan for follow up.

Making Effective Leadership Training Investments

The court's definition in TLC is inaccurate to the extent in relies on the accountable plan rules, which cover only employee reimbursement arrangements, in determining the existence of a reimbursement or other expense allowance arrangement to identify who bears the expense under

Federal tax tips

This includes wages, employee benefit and deferred compensation plans, employer-provided fringe benefits, reimbursement of payments to employees under an accountable plan for the employee's business travel expenses, and payments made by the employee to providers of the employee's travel, meals, and lodging when the employee is traveling on government business and is reimbursed under the accountable plan.

IRS finalizes 3 percent withholding regulations; efforts to repeal law still in play