If I pay out of my pocket for work supplies/equipment... and I am paid as a reimbursement with my regular pay, is the reimbursement taxable? In other words, if I spend $40 of my money, and they reimburse me, am I actually getting less than $40 back?
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Reimbursement Taxes?
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Actually, when you invest the money in the business and you earned the profit, then the tax will be applied for that money. You have to pay that money back.
rightnowcleaning
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Originally posted by bukkskin View PostYes, you will be getting the short end of the stick like that. Make them pay you back in cash, sales tax included. Depending on how much you make annually, paying you back in your paycheck could throw you into a higher tax bracket also.
I'm afraid this is not correct. If you are reimbursed for expenses where you supplied the receipts, this is called an accountable plan. The reimbursement does not affect your taxable income. If the employer is withholding taxes they have the reimbursement set up incorrectly. If you are paid an allowance and don't have to turn in receipts, it is an unaccountable plan and is taxable as wages.
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Originally posted by jnd1959 View PostI'm afraid this is not correct. If you are reimbursed for expenses where you supplied the receipts, this is called an accountable plan. The reimbursement does not affect your taxable income. If the employer is withholding taxes they have the reimbursement set up incorrectly. If you are paid an allowance and don't have to turn in receipts, it is an unaccountable plan and is taxable as wages.
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Originally posted by bukkskin View PostIf my employee buys $10,000 of deer feed for me and I just add $10,000 to his paycheck, he will pay 20% income tax and only get $8,000 back in his pocket.
No??
The problem that arises is that sometimes the reimbursement is added to the paycheck but is incorrectly coded as wages or allowance. You can have non-taxable reimbursements added to the paycheck. The simplest way to avoid that is to write another check outside of payroll and clearly code it as a reimbursement (make sure employer keeps the receipts) but it can be added to the paycheck as a non-taxable transaction.
Hope this helps clarify.
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Originally posted by bukkskin View PostYes, you will be getting the short end of the stick like that. Make them pay you back in cash, sales tax included. Depending on how much you make annually, paying you back in your paycheck could throw you into a higher tax bracket also.
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A company that knows what it's doing will issue a seperate check for your expense reports. It's simply reimbursing full expenses. If they plug that in to wages, they're screwing everyone but the government. The company would pay taxes on it, you pay taxes, and they end up reporting it as wages o the books rather than the expense incurred. Gas for example would be plugged to the fuel expense account and then to an employee reimbursement liability account until the check is cut. If they are adding those reimbursements to your payroll stub, chances are they might have some ignorant people runni g the books and it can only get worse from there.
Of course you would rather get the money back any way possible now, because iirc, you can't itemize business expenses anymore with the tax law changes.
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Originally posted by Burnadell View PostYour employer should reflect that the reimbursement is just that and not taxable income.Last edited by stickbowcoop; 09-10-2018, 03:00 PM.
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