An employee doesn't pay tax on an
advance, reimbursement or other expense allowance received
from his employer under an "accountable
plan." In contrast, an advance, etc. made under
a "nonaccountable plan," is fully taxable to the
employee and subject to FICA and income tax
withholding. Ouch!
meet these requirements to be treated
as an "accountable plan"
... for a deductible business expense
that he paid or incurred while performing services an
an employee of his employer.
... the employee must adequately
account to his employer for the expense within a
reasonable period of time.
... the employee must return any
excess reimbursement or allowance within a reasonable
period of time.
... time, place and business purpose
must be substantiated; entertainment must also include
the occupation about the person or persons
entertained, including name and title.
