Article Date:
September 2019

Word Count:



TCJA Creates New Reasons for Accountable Plan Expense Reimbursements

For 2018-2025, the Tax Cuts and Jobs Act (TCJA) eliminates itemized deductions for employees who incur unreimbursed expenses for company business.1


If you operate your business as a corporation, this can impact you.


If you have employees who incur employee business expenses on behalf of your business and you don’t reimburse them, they are simply out that money. The TCJA denies them a deduction for those business expenses.


And if you reimburse business expenses to yourself as a corporate owner or to your employees incorrectly, you turn what you thought was a tax-deductible reimbursement of business expenses into W-2 taxable income. Think how ugly this is.



You incur a proper business expense.


Your corporation reimburses you, the shareholder-employee, for the expense but does so in violation of the rules.


You now have W-2 income from the improper reimbursement.


You have no personal tax deduction for the proper business expense.


Your corporation pays extra payroll taxes because the proper business expense is now a W-2 wage.




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