Job Related Travel Expenses

[mep-tax]

Prior to being hired by my company, I incurred travel expenses ($20,000) in 2019. Starting in 2020, I became an employee. My company would like to reimburse me for the $20,000 of expenses all of which I have receipts for. Is there a way to do this and make it deductible? Can I send them a 2019 invoice and list only the expenses?

[ThomasM125]

Even if you could relate the expenses to the job they would be considered employee business expenses and as such would likely not be deductible on your federal tax return under the new tax law in effect starting in tax year 2018.

You may be able to benefit from them on your state tax return, depending on the laws in your state. Also, they would be deductible as itemized deductions, limited to the amount over 2% of your income, so you would need to be able to itemize to get any benefit from them.

You could report the expenses in the year you received the reimbursement though.

[Opus 17]

Partly because of changes to the tax law, and partly because of how things have always been, the company must treat the payment as a taxable bonus or supplement to your wages.  It should be on your W-2, and not on a separate 1099-MISC or 1099-NEC.

You won't be able to deduct anything from the income at the federal level.  As mentioned, you might have a state deduction.

But getting your expenses 60% covered (net after taxes) is better than zero % covered, right?

[pk]

@mep-tax ,  can it be done i.e. be reimbursed for expenses incurred  ?  Yes  ( short answer ).  As a contract / self-employed person , yes you can invoice the customer.  But to me this would open up a whole bunch of issues ( undoubtedly can be solved ) -- (a) you are talking about expenses incurred in a closed year  ( both for the customer  and also for your books );  (b) you as a self-employed ( Schedule C ) must have already shown this as expenses associated with the income from this customer; (c) book-keeping issues for you and the customer.

It may far simpler for the employer to issue you a signing bonus for an agreed amount to make you whole ( and  pay taxes on that ).

That is my view