topic My pleasure. in After you file

My husband traveled a few times last year on business. He was reimbursed on a per diem rate for meals, but he didn't spend as much as he was reimbursed. Is this taxable?

Babydmom07 — Sat, 01 Jun 2019 15:29:20 GMT

We didn't receive a separate 1099 for these reimbursements. I just wanted to know if we need to report them as income, particularly meals, as he only spent a little and they reimbursed him for more than that. And if we do report them as income, how do we report them?

It depends whether or not this is an accountable or non-a...

Coleen3 — Sat, 01 Jun 2019 15:29:22 GMT

It depends whether or not this is an accountable or non-accountable plan.

With a non-accountable reimbursement plan, your reimbursement should be included in your taxable income. In that case, you are allowed to deduct all your employee expenses "as if" you received no reimbursement.

An accountable plan is a plan where an employee typically would submit a monthly expense report for reimbursement. A plan under which an employee is reimbursed for expenses or receives an allowance to cover expenses is an accountable plan only if the following conditions are satisfied:

there must be a business condition for the expenses;

the expense must be in connection with performance of services as an employee
the reimbursement must be for an expense the employee could deduct on his/her tax return

the employee must either substantiate or be deemed to have substantiated the expenses;

Generally substantiation consists of receipts and/or cancelled checks and invoices that show the nature and amount of the expenditure
Expenses deemed to have been substantiated are such things as using the mileage allowance rate (50 cents per mile) rather than actual expenses for operating a vehicle or use of a per diem rate for overnight travel rather than requiring receipts for meals

the employee must return to the employer amounts in excess of the substantiated (or deemed substantiated) expenses within a reasonable time

The alternative to an accountable plan is an allowance or nonaccountable plan. By definition, a nonaccountable plan is one that does not meet the requirements of an accountable plan. Routinely these plans involve the employer providing a set amount, or an allowance, to the employee for travel. The employee does not account to the employer for the expenditure of these funds. Amounts paid under a non-accountable plan are income to the employee and must be included in wages with appropriate tax withholdings. An employer can have an accountable plan for some items, and a non-accountable plan for others.

So if he did file an expense report for each trip, but on...

Babydmom07 — Sat, 01 Jun 2019 15:29:24 GMT

So if he did file an expense report for each trip, but on this report he received a per diem rate for his meals (he provided the receipts for the meals he did eat but the per diem exceeded these meals) would this be counted as accountable? And would an accountable plan be already be included in wages or do we have to report it separately? The fiscal rep. my husband got the receipts didn't seem to think that they would be included with wages.

He never returned any amount in excess of his wages eithe...

Babydmom07 — Sat, 01 Jun 2019 15:29:26 GMT

He never returned any amount in excess of his wages either - they didn't make it sound like he needed to.

The NON accountable plan is reported in Box 1. According...

Coleen3 — Sat, 01 Jun 2019 15:29:28 GMT

The NON accountable plan is reported in Box 1. According to the IRS, he must return the money under an Accountable plan (one where he submits an expense report).

Sorry, I meant to say in excess of what he actually spent...

Babydmom07 — Sat, 01 Jun 2019 15:29:29 GMT

Sorry, I meant to say in excess of what he actually spent on meals.

I'm going to ask him to clarify with his department what...

Babydmom07 — Sat, 01 Jun 2019 15:29:32 GMT

I'm going to ask him to clarify with his department what kind of plan it is. They have been aware that he's gotten more back than his receipts accounted for, and they gave it to him anyway, so I'm guessing this is a non-accountable plan based on what you've told me. Your answers have been very helpful - thank you!

My pleasure.

Coleen3 — Sat, 01 Jun 2019 15:29:34 GMT

My pleasure.