Expense Reimbursements 2025: Proper Recordkeeping and Accounting for OBBB and Payroll Compliance

Employee expense reimbursements that aren’t handled accurately can wind up being disallowed as expenses, or even considered as compensation by the IRS. If this happens, your company is on the hook for paying the associated payroll taxes – costing you more money as well as any penalties! You need to make sure your reimbursements are truly considered nontaxable, and that’s a real challenge for even seasoned payroll pros.

In order for expense reimbursements to be non-taxable, they must be distributed and recorded under an “accountable plan.” You will discover what that means, and how to evaluate your expense reimbursement policy for compliance. Expense reimbursements are commonly reviewed and scrutinized in payroll tax audits. The use of per diems are a common way to simplify many travel related expenses. Both the IRS and DGA publish the current amounts by geographic location.

Keep in mind the rules of thumb in regards to non-taxable expense reimbursement. They must be for the employer benefit, used in the course of your trade or business, not be considered extravagant, and properly accounted for. We will discuss the details of each, as well as specifics for various types of expenses. You should know the taxable limitations for moving expenses, meals, entertainment, uniforms and more. The OBBB extended the expense deductions under the 2017 TC&JA, and created others. We will discuss the latest details.

Finally, analyze your current policies and procedures by learning the best practices of current businesses. Learn from court case studies about common mistakes made in expense reimbursement practices. With all the knowledge in the webinar, both payroll and A/P will sleep better at night knowing when reimbursements are truly non-taxable.

Areas Covered:-

I. Accountable versus Non Accountable Plans

• General guidelines about non-taxable expenses vs wages
• 3 elements of an accountable plan- business connection, substantiation and reconciling
• Employment tax treatment

II. The Use of Per Diems

• Amounts for Lodging, Meals and Incidentals
• Recordkeeping
• Sources

III. Rules of Thumb – General Guidelines from the IRS

• Employer vs Employee benefit
• In the course of trade or business
• Reasonable vs Extravagant
• Accounting and Documentation

IV. Specific Types of Expense Reimbursements

• Pre-Employment Expenses
• Moving expenses
• Meals and Entertainment
• Uniforms
• Automobile Travel
• Employee Personal Property

V. The TC&JA and OBBB

• Meals and Eating facility
• Moving expenses
• Transportation Fringe Benefits

VI. Best Practices for Payroll Managers  

• A/P and Payroll coordination
• Reimbursement policy
• State regulations
• Identification and Prevention of employee fraud

VII. Case Studies

Who Will Benefit:-

• HR managers
• Payroll Managers
• Budget Personnel
• HR and Payroll Compliance Managers
• Department Managers
• Fringe Benefit and Travel Staff.