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FAQsReimbursementSalary
Reimbursements from your employer are considered taxable or non-taxable depending on variety of factors. Here are a few examples and guidelines:
Non-Taxable Reimbursements
- Business Expenses: Business expenses incurred by you in the course of performing your job are not considered as income. These expenses must be necessary and directly related to your employment. An example would be taking an important client for dinner.
- Accountable Plan: Your employer should have an accountable plan in place. An accountable plan requires you to substantiate your expenses by providing receipts or other supporting documentation. Any excess reimbursement or allowance must be returned to your employer.
- No Personal Benefit: The reimbursement should not provide you with a personal benefit. In other words, it should cover only the actual expenses you incurred while conducting your job duties.
Typical non-taxable reimbursements can include travel expenses, mileage, meals during business travel, and other work-related costs.
Taxable Reimbursements
Reimbursements may be considered taxable if they meet the following criteria:
- Non-Business Expenses: If the reimbursement is for personal expenses or expenses that are not directly related to your job, treated as taxable income.
- Lack of Accountability: If your employer does not have an accountable plan in place and does not require you to substantiate your expenses, the IRS views the reimbursement as taxable.
- Excess Reimbursement: If your employer reimburses you for more than your actual expenses, the excess amount are be considered taxable income unless you return it to your employer.
- Non-Work-Related Benefits: If the reimbursement provides you with a personal benefit unrelated to your job (e.g., reimbursement for a personal vacation)
Reporting Taxable Reimbursements
- Log in to your account.
- Click “Your Expat Taxes” in the side nagivation pane to reveal the sub-menu, and select “Foreign Employment Compensation”
- Scroll down to “Additional Considerations”
- Click the checkbox “I received additional compensation in addition to salaried income from this employer”
- Add the total received for taxable reimburrsements under the “Other Income” Category.
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