The expense reimbursement process allows employers to pay back employees who have spent their own money for business-related expenses. When employees receive an expense reimbursement, typically they won’t be required to report such payments as wages or income.
Employers have two options for reimbursement of employee business expenses. For accountable plans, the reimbursement or excess amount is excluded from income and is not subject to withholding taxes. In non-accountable plans, the reimbursement or excess amount is included in income and subject to withholding taxes.
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