Can a corporation pay the expense of travel expenses of an employee's spouse on a business trip and just have as a non-deductible expense? Reading the IRS regulations, it does not seem as that type of expense is a deductible expense. Employer is still wanting to pay.
-
-
The expenses of the spouse can be paid by the corporation and included as salary to the employee.Originally posted by peggysioux View Post
Maribeth -
This is my assertion as well.....would be taxable to the spouse as taxable wages reported on a W2.Originally posted by Maribeth View PostComment
-
Non-Deductible
In lieu of including his wife's travel costs as part of his W-2, most of my clients record it as a non-deductible expense. (Truth of the matter I do not look at every trip report, so they may be getting by with some no-nos).
This non-deductible treatment leaves out the W-2 treatment mentioned in the above posts. However, if this gets put on a W-2 then the corporation gets to deduct it as salary expense. Six of one and half-dozen of another??Comment
-
-
I think this is possible, but the poster mentioned that the employer was adamant about paying so as long as he knows it should come out of his pocket, then fine. If not, then W2.Originally posted by Edsel View PostComment
-
Travel is a benefit to the spouse
As the travel expenses paid for the spouse is a direct benefit, it should be inputted income to the employee. As this expense is not ordinary and necessary for the business, I believe that this expense is non-deductible, even though it is included in the W-2.Comment
-
Just to clarify - or perhaps complicate:
I believe this counts as a fringe benefit, but not one that's excludable from the employee's income. Thus it must go on the W-2, box 1. A separate question is whether it's subject to FICA. It might not, because it's a fringe benefit to a family member, not the employee, but that should be researched.
As for being deductible, let's be clear about whether we're talking about the employer's side or the employee's. I think we agree that the expense is not deductible by the employee, regardless of how it's reimbursed, if at all, and without even getting into "ordinary and necessary", it's easily disqualified because it's not required by the employer.
However, the employer's perspective isn't necessarily identical. It's common practice for many employers to provide such travel reimbursements for spouses when an employee is sent on an extended or distinctive business trip, particularly if the nature of the job is such that it doesn't usually require travel. For example, I once got a lovely, free weekend in Chicago because hubby, who at the time was a technical support engineer for a small software company, had to spend about six weeks at one of their customers due to a very unusual situations. From the employer's perspective, such an expense is both ordinary - many companies do it - and necessary - it would be difficult to hire and keep highly skilled staff if they had to travel without such fringe benefits.
Does that mean I'm correct that the employer can deduct it? I don't know, I'm hardly an expert. But regardless, I think it's clear that the question of whether or not it's deductible doesn't have to have the same answer for employer and employee, because of the requirement criterion.Comment
Comment