Hiring Employees
Employee Business Expense (Accountable/Non-Accountable Reimbursements Plans)

A reimbursement or allowance arrangement is a system by which yousubstantiate and pay the advances, reimbursements, and charges for you employees' businessexpenses. How you report a reimbursement or allowance amount depends on whether it is anaccountable or a non-accountable plan.

Accountable planSuisse Hotels: To be an accountable plan, yourreimbursement or allowance arrangement must require your employees to meet all three ofthe following rules.

ERROR MSG1) They must have paid or incurred deductible expenses while performing services as your employees.

2) The must adequately account to you for these expenses within a reasonable period of time.

3) They must return any amounts in excess of expenses within a reasonable period of time.

Amounts paid under an accountable plan are not wages and arenotcasinos en linea subject to income tax withholding and payment of social security, Medicare, andfederal unemployment taxes.

Non-accountable plan: Payments to your employees for traveland other necessary expenses of your business under a non-accountable plan arewages and subject to income tax withholding and payment of social security, Medicare, andFUTA taxes. Your payments are treated as paid under a non-accountable plan if:

1) Your employee is not required to or does not substantiate timelythose expenses to you with receipts or other documentation, or

2) You advance an amount to your employee for business expenses andyour employee is not required to or does not return timely any amount he or she does notuse for business expenses.

Table 16-1 ReportingReimbursements

Important References:

Publication 15            Circular E,Employers Tax Guide
Publication 535hoteles en Cardiff     Business Expenses
Form 1040 Schedule C line 24  Profit or Loss from Business
Form 1120hotel rooms Rotterdam   U.S. Corporation Income Tax Return