![]() Finally, if your employer pays you an allowance or reimbursement that exceeds your actual expense, you must be required to refund the excess within a reasonable time. ![]() Second, you must be required to provide proof, like a receipt, of the expense to your employer within a reasonable time.Expenses must be incurred while performing services as an employee of the company and the reimbursement must be for the expenses and not wages.To be an accountable plan, the expense reimbursement arrangement must meet all of the following rules: Unless an "Accountable Plan" for employee reimbursements, your expense reimbursements are likely supplemental wages subject to supplemental tax withholding rates. When expense reimbursements are considered supplemental wages These wages generally include commissions and bonuses, any severance payments upon termination of your employment, taxable prizes and awards, retroactive pay increases, reimbursements of nondeductible moving expenses, taxable fringe benefits and certain kinds of expense reimbursements and allowances. If your employer pays you extra money, outside of your regular salary, the federal government typically treats this as supplemental wages. ![]() However, if you receive any form of supplemental wages during the year, your employer may be required to withhold tax using a different method. If you work as an employee, the amount of tax withheld from your paycheck is based upon the information you provided on Form W-4 and the amount of your wages. ![]()
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