Use this button to switch between dark and light mode.

Don’t Keep the Change. Following the Accountable Plan Rules So Your Expense Programs Don’t Result in a W-2 Entry

October 10, 2023 (3 min read)

Employers that reimburse employees for the expenses they incur as a result of travel or other business on behalf of the employer (reimbursement of personal expenses almost always being taxable) must adhere to the Internal Revenue Code’s accountable plan rules. If not, those advances or reimbursements will become taxable to the employee. That means that they could be subject to federal (and state) income tax withholding, Social Security and Medicare taxes, federal unemployment and state unemployment taxes, and Form W-2 reporting. This practice note shares more about how to follow the rules.

Read now »

Related Content

  • Tax Key Legal Developments Tracker (Federal)
    Reference our key legal developments tracker to keep up-to-date on key federal tax developments. For example, IRS announced in September the amount of per diems permitted in 2023/2024. A per diem, provided at or below prescribed rates, meets the substantiation by adequate records requirement of accountable plans. And our tracker announced issuance of IRS Notice 2023-68.  That notice sets forth the special transportation industry meal and incidental expenses rates ($69 for any locality of travel in the continental United States (CONUS), and $74 for any locality of travel outside the continental United States (OCONUS) and the rate for the incidental expenses-only deduction ($5 per day). The IRS issues this annual update of per diem rates that taxpayers may use to comply with Rev. Proc. 2019-48 which sets forth the rules for using a per diem rate to substantiate business expenses under section 274(d) and Treas. Reg. § 1.274-5.

Practical Guidance Updates 
Featuring the latest updates from your Practical Guidance account.    


Experience results today with practical guidance, legal research, and data-driven insights—all in one place.

Experience Lexis+