You could use an Accountable Plan for reimbursement of employee expenses, such as Home Office.
An accountable plan is a list of guidelines that you create that explains how you will reimburse expenses, and which expenses qualify for reimbursement.
The IRS gives you a lot of flexibility in arranging the plan. The major requirements are:
- The expenses must have a business connection; that is, they must have been paid or incurred while performing services as an employee
- The employee must adequately account to the employer for these expenses within a reasonable time. You must require employees to provide you with detailed information on these expenses, including date, time, place, amount, and business purpose for the expense.
- You must require the employee to return excess reimbursements within a reasonable and specific period of time, depending on the circumstances. If employees are not required to turn in excess amounts, these amounts must be included in their income.
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