Reimbursement Plan

[appelman]

Form 2106 when there is reimbursement.

The rules ordinarily call for reporting ALL expenses and subtracting ALL reimbursement that is not included in Box 1 of the W-2. In this case, it sounds like you are also going to have to amend to increase wages. Then what to do about FICA? It sounds something like unreported tips.

[sandigi]

written plan good idea but not necessary

I have always been told that the accountable reimbursement plan must be written. All you should have to do is see a copy of their written plan to see if it qualifies. Have I been wrong all this time?

I don't see anything in the requirement that says the plan has to be in writing. It is a good idea though and would explain the way the employer would be handling the reimbursements on the employee's W-2.

[sandigi]

I agree with Kram & Appleman

Now that you have clarified that none of the reimbursement is in W-2 box 1 wages.

I agree that the meals and entertainment are under an "accountable plan" and thus are not reported on the tax return. No income, no expense.
At the beginning, you said these expenses were accounted for and turned into employer.

Car and cell are paid under "nonaccountable plan" and should have been in W2 wages and were not, so yes, you have wages/income that was not reported.
I think report it on Line 21 other income.
As to the unreported fica wages, isn't this something the employer first has to correct?

Employee job expense goes to Form 2106 then Sch A subject to 2% floor. All reimbursement $ minus actual expense or standard mileage.

[MAMalody]

Based on the dollars in question, without a written policy, it probably not clear an audit.

[S T]

It seems from original post that the Taxpayer is providing receipts and accountability for meals/Entertainment - so that is out of the equation.

So now I am going to ask this question - what if the Taxpayer is reporting mileage for auto expenses, and cell phone costs - but the Employer is only paying $100 weekly towards these expenses and the taxpayer is responsible for the balance of the costs and then can report via form 2106

Is this now an accountable plan and the $ 100 per week would not be considered wages/additional income - however the taxpayer would reduce his auto/cell phone expenses by the reimbursement on form 2106.

Seems like employer is on an accountable plan - although it is only $ 100 per week limit? wondering if it depends on the Taxpayer reporting to the Employer for this benefit and whether or not it would be included as Accountable Plan, seems like it would be?

Sandy

[FEDUKE404]

A bit more discussion

It seems from original post that the Taxpayer is providing receipts and accountability for meals/Entertainment - so that is out of the equation.

So now I am going to ask this question - what if the Taxpayer is reporting mileage for auto expenses, and cell phone costs - but the Employer is only paying $100 weekly towards these expenses and the taxpayer is responsible for the balance of the costs and then can report via form 2106

Is this now an accountable plan and the $ 100 per week would not be considered wages/additional income - however the taxpayer would reduce his auto/cell phone expenses by the reimbursement on form 2106.

Seems like employer is on an accountable plan - although it is only $ 100 per week limit? wondering if it depends on the Taxpayer reporting to the Employer for this benefit and whether or not it would be included as Accountable Plan, seems like it would be?

Sandy

While I understand the tax issues at hand here, I would still need more info re the following: "but each week the salespeople turn in expense records and receipts for meals and entertainment and they reimbursed for those."

If there is a clear understanding by employer/employee as to which meals specifically should be deemed a legitimate business expense (overnight travel involved, "business lunch" with client) then those expenses should be a wash. Nothing shows up on the W2, and nothing shows up on the Form 2106. That would fall pretty firmly into the "accountable plan" venue.

OTOH, if the employee is only turning in "meal receipts" things could get shaky....and taxable. Years ago the state government was very generous in reimbursing employees for meals if just about any travel was involved. They then went to Forms 1099-MISC for that income, and later put the hammer down on claiming any business meals without overnight travel and/or a VEEEERY long day involved. IIRC, claiming b'fast required employee to be on the road before 6 am and claiming dinner required employee to be on the road after 8 pm, and NO lunch absent an overnight stay. Yeah, there were a lot of extremely upset employees who regularly traveled in the somewhat local area.

From the original post, it appears there MUST be some accounting of allowable business expenses (car and cell phone) reduced by employer reimbursements. One would think the "allowances" for such would already appear in the W2 as taxable income. As for the meals reimbursement...well, we need more facts. There could be NO taxable income, or there could be some (even all!) taxable income for those "expenses."

FE

[appelman]

As I understand the 2106 rules...

If you are claiming ANY expenses (if not, you wouldn't be filing the form) and received ANY reimbursement (not reported on line 1 of your W-2), you must report ALL your expenses and ALL such reimbursement.