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thetaxman
Returning Member

Why are reimbursements for expenses increasing my taxable income?

In the K-1 section of TurboTax, it says:

 

"Enter the reimbursements you received from this partnership in 2018:

- Reimbursements for Meals & Entertainment

- Reimbursements for Other Expenses "

 

When I enter in numbers for these reimbursements, why do they increase my taxable income? These are business expenses for which I was reimbursed, they should have nothing to do with my taxable income.

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2 Replies

Why are reimbursements for expenses increasing my taxable income?

IMO:

A Reimbursement would be seen as an increase in Taxable income if it is not offset with a  corresponding deductible expenses.

 

for example, if you are claiming expenses - this would lower your taxable income. Subsequently entering the reimbursement it would offset the claimed expenses and ZERO out.

thetaxman
Returning Member

Why are reimbursements for expenses increasing my taxable income?

Say that I buy supplies for my business using my personal card instead of my company card. The supplies are used only for business purposes. One week later, I reimburse myself for the supplies purchased.

 

In the above example, should I pay taxable income on the reimbursement?

 

IMO: To your point, a reimbursement by definition corresponds to an expense. If it didn't have a corresponding expense, it would be an owner's distribution and not a reimbursement. So it should always have a net-zero impact on income. TurboTax's system for entering reimbursements doesn't appear to do that in my view.

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