What is an accountable plan?
- Non-taxable reimbursements. Under IRS regulations, reimbursements made through an accountable plan are not taxable income to the recipient — failing to implement a plan can deem those reimbursements taxable.
- Lower gross income. Non-taxable reimbursements are excluded from gross income, potentially keeping employees in a lower bracket and reducing employer Social Security, Medicare, unemployment, and disability costs.
- Business expense deductions. Employers deduct legitimate business expenses reimbursed under an accountable plan — a true write-off.
Be IRS-compliant
To qualify, the plan must have a business connection, require adequate substantiation, and require any excess reimbursement to be returned within a reasonable period. We help you adopt one and administer it correctly.