Estimated tax tip savings. Imagine this: you (or one of your employees) submit $12,000 of expenses that the IRS deems wages, not expense reimbursements, causing $4,836 in extra taxes.
When employees spend money on behalf of your business, you probably reimburse them and deduct the expense.
That’s a perfectly acceptable practice—if you’re following the IRS expense reporting rules, which tax law calls the “accountable plan” rules.
However, if you don’t follow these practices—and many business owners do not—you’re exposing yourself and your employees to thousands of dollars in additional, unnecessary taxes.
Even worse, if you operate your business as an S or a C corporation, you are an employee too, which means the IRS will whop you with this stick from both ends—as both a business owner and an employee!
But here’s good news: With some straightforward safeguards in place, you don’t have to worry about additional costs or unhappy employees. In fact, we are going to give you two tools that you ... Log in to view full article.