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ali16
Level 2

Pub 54 reimbursement of employee expenses under accountable plan is not earned income. If my company reimbursed a value for a rental car should I report in Form 2555?

 
5 Replies
KathrynG3
Expert Alumni

Pub 54 reimbursement of employee expenses under accountable plan is not earned income. If my company reimbursed a value for a rental car should I report in Form 2555?

It depends. For US based expenses incurred for US employers, that was reported through an accountable plan and reimbursed, it is not reported anywhere (see page 29 of IRS Publication 463).

 

Form 2555 is for foreign earned income exclusion.

IRS 2019 Form 2555 Instructions

@ali16

ali16
Level 2

Pub 54 reimbursement of employee expenses under accountable plan is not earned income. If my company reimbursed a value for a rental car should I report in Form 2555?

@KathrynG3 ,

This relates to a foreign company accountable plan, reimbursed expenses - such as a car (it was not part of benefits in my work contract), and it was used only to allow me to go to the company office. Is this a perceived benefit to be included as income in form 2555? 

Thanks again

KathrynG3
Expert Alumni

Pub 54 reimbursement of employee expenses under accountable plan is not earned income. If my company reimbursed a value for a rental car should I report in Form 2555?

Ok, thank you for the clarification. Then, it depends if the rules were met to exclude the reimbursement. When you say "a value" was reimbursed, that implies the expense and the reimbursement were not equal. 

While it is acceptable for the employer to provide an allowance, any excess must be returned within a reasonable time frame.  

 

If the excess was not returned, then the portion of the expense that was in excess must be allocated between excluded and included income.

For steps in calculating any excess, see page 23 of IRS 2019 Publication 54 Tax Guide for U.S. Citizens and Resident Aliens Abroad

@ali16

ali16
Level 2

Pub 54 reimbursement of employee expenses under accountable plan is not earned income. If my company reimbursed a value for a rental car should I report in Form 2555?

@KathrynG3 

Thanks again Kathryn,

If you can be kind to answer the last question. The value amount reimbursed has no excess (same amount of expense was reimbursed), it was a foreign company "accountable plan" reimbursement, but for a rental car - used for going to work. Is this considered by IRS as income to be reported or no?

BillM223
Expert Alumni

Pub 54 reimbursement of employee expenses under accountable plan is not earned income. If my company reimbursed a value for a rental car should I report in Form 2555?

It sounds to me that you should do what Kathryn said - don't report the reimbursement for the car (since it was the same as what you actually paid for the rent car) - however, this means that it won't be earned income for purposes for form 2555. Nor should it be since form 2555 is for the purpose of excluding earned income that you are taxed on.

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