Expense Reimbursements for Employees

An employer may reimburse you for travel and meal expenses incurred while performing services for the employer. The tax treatment of the reimbursement, including per diem allowances, depends on whether the employer has an “accountable plan” or a “nonaccountable plan.”

If expenses are reimbursed under an accountable plan, the employer deducts the amount allowable as travel and meal expenses, and you exclude the reimbursement from income.

If the expenses are reimbursed under a nonaccountable plan, the employer reports the reimbursement as taxable wages to the employee on Form W-2 and takes a wage expense deduction.

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