Rules For Payroll Expense Reimbursements

Expense Reimbursement Training Courses

Employees frequently pay company expenses - such as automobile, travel, meal, or entertainment expenses - out of their own pocket, and then ask for reimbursement.

Generally speaking:
  • The expense reimbursements must be for deductible business expenses that are paid or incurred by an employee in the course of performing services for your organization
  • The employee must be required to substantiate the amount, time, use, and business purpose of the reimbursed expenses
But, with regard to payroll, are these tax-deductible expenses? Well, sometimes yes and sometimes no. If yes, are they taxable to the company? The employee? Read below for our recommended expense reimbursement training courses and our 'Basic Rules For Payroll Expense Reimbursements'.

Don't make simple mistakes when determining whether and expense reimbursement is taxable or not. Get trained using the recommended links below and avoid fines and penalties!

For Training On How To Handle Expense Reimbursements

Featured Course: Compliance Tips For Employee Expense Reimbursements

This course covers the rules and requirements for expense reimbursements, as well as best practices for processing expense reimbursements either in payroll or accounts payable, including:
    Expense ReimbursementIRS expense reimbursement requirements
  • Whether employee expense reimbursements should be run through payroll or accounts payable
  • Which payments being made to your employees may be subject to payroll taxes
  • Accountable plan rules - and how they apply to employee travel and expense reimbursements
  • How employee business expenses made under accountable plans can be excluded from an employee's gross income
  • The accounting issues associated with the use of per diems
  • How to determine the scope and potential areas of focus for your audit
  • How to identify any areas of concern prior to an external audit or an audit by another group within your company
  • Common areas where mistakes or issues can normally be found
  • How a review can help you detect internal control issues
  • Where to go to for assistance so you’re not re-creating the wheel
  • Devising a game plan on what you want to review and how to divide and conquer
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Basic Rules For Payroll Expense Reimbursements

IRS and DOL rules allow employers to pay back employees who have spent their own money for business-related expenses.

Most expense reimbursement plans are set up as an "Accountable Plan". An Accountable Plan allows the employee to either receive and advance/allowance or be reimbursed for expenses under the following conditions:
  • The expense must be in connection with the performance of services as an employee
  • There must be receipts and invoices that document the nature and amount of the expenditures
Requirements For Expensing Meals And Travel

Company policy may provide a per diem allowances for meal and/or lodging expenses during travel. For companies not using a per diem allowance, the IRS requires the following documentation:
  • Who was there?
  • Why the meal was considered official business?
  • When did the meal occur?
  • Where did the meal occur?
  • What was the cost of the meal?
For reimbursement for travel, the IRS requires the following documentation for each trip:
  • The reason for the travel expense
  • The date of travel
  • The number of miles driven
  • Beginning and ending odometer readings
What Should Be Included In An Expense Reimbursement Policy

An expense reimbursement policy should include:
  • The type of expenses that employees can claim
  • The preferred time period for employees to submit expenses
  • The process for submitting/requesting reimbursement
  • The process for returning excess reimbursements or allowances
  • An internal system for collecting, verifying, validating, and paying employee expense claims
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