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Have you considered a "Reimbursement Plan," for your employees?

Have you considered a "Reimbursement Plan," for your employees? .

if you have not considered it, you should. When you adopt a plan, you may adopt an "accountable plan" or a "nonaccountable plan." It would probably be to your benefit and your employees benefit to adopt an accountable plan.

ACCOUNTABLE PLAN
In an accountable plan, if an employee substantiates his or her travel, transportation, meals and entertainment expenses to the employer, none of the reimbursement is reported on the W-2 unless you have reimbursed the employee for more than his or her expenses. This plan would simplify employee record keeping. Under this plan the employer benefits by deducing the reimbursement expense, and the employee, benefits because his taxable income would be less.

NON-ACCOUNTABLE PLAN
In a nonaccountable plan, an employee is not required to substantiate his or her expenses. In this plan, you must include any reimbursement on the employee's W-2. In addition to the additional record keeping required by your firm of employee expenses throughout the year, the employee can never deduct the full amount of expenses on his or her return. This is because any job-related expense deduction is reduced by 2 percent of the employee's adjusted gross income. Both the additional record keeping and the fact that the employee can never fully deduct the expenses incurred are negatives to the nonaccountable plan.

Please consider these two alternatives and, should you want to discuss them further, don't hesitate to call to set up an appointment. As you can see, there are obvious advantages to one plan over the other.



 
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