Handle With Care: Consider An Accountable Plan For Employee Expenses

Like most physician and dental practices, yours more than likely has established certain policies and procedures for handling employee expenses. The question is: Does your approach to reimbursing staff expenses qualify as an "accountable plan" in the eyes of the IRS?

Making the Choice

If you have an accountable plan in place, expense reimbursements and allowances (per diem) will not be included on your employees' W-2s, and they will not be subject to withholding and employment taxes. Moreover, they are considered deductible expenses for the employer.

On the other hand, if you do not have an established accountable plan, reimbursed amounts and expense allowances must be included in your employees' gross incomes, and the amounts are subject to withholding and employment taxes.