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Can An Employer, Who Agrees To Reimburse You For Company Expenses, Deduct Taxes On Your Money?

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Can An Employer, Who Agrees To Reimburse You For Company Expenses, Deduct Taxes On Your Money?

Postby Morvin » Wed Oct 18, 2017 1:25 pm

An employee was sent out-of-town to visit another office. This employee did not receive an company credit card, so they had to pay for things out-of-pocket. The employee was allotted a sum of money from the company in order to pay for food. All money was agreed to be reimbursed upon her return. She came back and submitted her expenses. The money she received was in a form of a check, but taxes were taken out on the same amount of money she was suppose to receive. For example: she spent $50 on food, then tax on that making her net $40).

Can you be taxed on money you suppose to be reimbursed for?

If not, please submit so evidence proofing it. Thanks.
Morvin
 
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Can An Employer, Who Agrees To Reimburse You For Company Expenses, Deduct Taxes On Your Money?

Postby Bardan » Wed Oct 18, 2017 1:29 pm

depends on the program he has in effect for reimbursed expenses
Bardan
 
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Can An Employer, Who Agrees To Reimburse You For Company Expenses, Deduct Taxes On Your Money?

Postby Gilburt » Wed Oct 18, 2017 1:44 pm

no, taxes should not be taken out of "per diem" money. if there is in fact an "agreement" stating that she would be reimbursed for any company approved, out of pocket money (i.e. per diem), then upon reimbursement, there are no taxes removed. most likely it's the accounting department that made the mistake.
Gilburt
 
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Can An Employer, Who Agrees To Reimburse You For Company Expenses, Deduct Taxes On Your Money?

Postby Antonio » Wed Oct 18, 2017 1:52 pm

It sounds like the employer is not operating an accountable reimbursement plan.
If that's the case, all expense reimbursements are taxable income and are included in box 1 of Form W-2.
The employee is left to scrabble for crumbs using Form 2106 that then flows to Schedule A as a 2% miscellaneous deduction.
Of course, if the employee does not itemize, they get no benefit there.

If the employer is going to skip the bookkeeping requirements for an accountable plan, the least that they can do is pay a generous per-diem amount so that employees have a fighting chance of at least breaking even.

If my employer pulled a stunt like that, I'd be polishing up my resume and getting ready to jump ship with little or no notice.
Antonio
 
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