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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 118615  
Subject: Re: Compensatory Expenses - re-revisited Date: 3/11/1999 10:52 PM
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[[ A few more questions on the topic of expense reimbursements being considered
taxable income:

For the past few weeks all my expense reimbursements are considered taxable
income. Here is the current idea -

I may be switching employers in the not to distant future, however, I may still be
working on the out of town project.

Question 1) The new employer may pick up all my expenses for me (air travel,
lodging, etc.), thus the $ would never hit my paystub. Since I never take
possesion of the $, would the IRS still consider this a reimbursement to me that
would need to appear on my 1040?]]

Generally no. But there are two different types of reimbursement plans: accountable (where you are reimbursed only what you spend, and only what you have documentation on) and non-accountable (where you simply receive an amount of money and you pay your expenses).
With the accountable plan, you have no additional taxable income. With the non-accountable plan, you do.
It sounds like what you are talking about above would be considered accountable, and would not be included in your income.

[[ Question 2) How can I get the IRS to not consider my reimbursements taxable?]]

Have your employer follow the rules for an accountable plan.

[[ As I recall, I would need to spend 20 consecutive business days away from the
non-home city. Does this time include vacations and training?]]

Sorry...you've lost me here. Perhaps I don't remember your original post. And I don't know where you have come up with this "20 day" thing. So perhaps I'm confused. But I would suggest that you hunker down with a copy of IRS Publications 463, 529, and 1542. After reading those publications, you'll know everything you want to know about employee business expenses, reimbursements, accountable plans, and all the rest.

TMF Taxes
Roy

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