Employee expense reimbursement is one of the targets of a current IRS audit initiative. Employers often provide travel advances, business expense reimbursement, or use of company property to employees. Unless expense reimbursements are made under an accountable plan, the payments must be included in employee wages. Accountable expense reimbursement plans provide tax savings for both employers and employees and allow the employer to exclude expense reimbursement from employee wages. However, these accountable reimbursement plans have strict documentation and record-keeping requirements, requiring timely reporting and return of excess reimbursements by employees. For certain expenses, per diem arrangements can be used in lieu of actual substantiation of the amount of expense. But insufficient documentation or faulty procedure can result in reclassification of the reimbursements as wages. This results in additional tax and possibly penalties. An employer may even become liable for taxes it failed to withhold from the employee reimbursement. While the Tax Cuts and Jobs Act (TCJA) did not change the treatment of employee business expenses reimbursed under an accountable plan, employee expenses that are not reimbursed under an accountable plan may no longer be deducted by the employee.
In this practical webinar, you will explore these requirements, determine how to report reimbursements that do not qualify under the accountable plan rules, and identify reimbursements that must be included in employee wages. You will also learn how to properly report expense reimbursements and facilities provided to employees in compliance with IRS requirements.
Among other things, you will learn about:
- Employee business expenses and reimbursements under the Internal Revenue Code
- Accountable and non-accountable expense reimbursement plans
- Substantiation and documentation required to exclude reimbursement or benefits from wages
- Options for meeting substantiation requirements
- Advantages and effective use of per diem payments
- How to control the risk of a “pattern of abuse” of per diem payments
- Valuation and treatment of personal use of company property (vehicles, cell phones, etc.)
- When expense reimbursements or use of company resources must be included in wages
- Travel advance and payment card administration
- The importance of timely processing of reimbursements and collection of excess advance funds
- Control and accounting procedures and the roles of payroll and accounts payable
Upon course completion, you will be able to:
- Determine whether an expense reimbursement qualifies for exclusion from employee wages
- Substantiate various expenses and benefits under an accountable plan
- Process reimbursements and collect excess advance funds in a timely manner
- Distinguish when expense reimbursements or use of company resources must be included in wages
- Recognize when per diem rates may be used and why employers may want to use them
- Calculate maximum per diem rates and how to use the high low method
- Establish and administer an accountable expense reimbursement plan
- Identify the importance of control and accounting procedures related to expense reimbursement
Patrick Haggerty
Patrick A. Haggerty is a tax practitioner, author, and educator. His work experience includes non-profit organization management, banking, manufacturing accounting, and tax practice. He has taught accounting at the college level for over 31 years. He is licensed as an Enrolled Agent by the U. S. Treasury to represent taxpayers at all administrative levels of the IRS and is a Certified Management Accountant. He has written numerous articles and a monthly question and answer column for payroll publications. In addition, he regularly develops and presents webinars and presentations on a variety of topics, including payroll tax issues, FLSA compliance, information returns, and accounting.
CLE Credits (Law)
| Credit | Value | Type | Format |
|---|---|---|---|
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HR Credits
| Credit | Value | Type | Format |
|---|---|---|---|
| HRCI | 1.5 |
General |
On-Demand/Recording |
| SHRM | 1.5 | On-Demand/Recording |
Accounting Credits
| Credit | Value | Field of Study | Format |
|---|---|---|---|
| CPE | 1.5 | Taxes | On-Demand/Recording |
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