Make sure your employee reimbursement plan satisfies the IRS
Abstract: Law firms that compensate their employees for expenses incurred in the course of employment generally deduct those reimbursements as business expenses, rather than reporting them as wages on the employees’ Forms W-2. But the IRS permits such deductions only for reimbursement or allowance arrangements that qualify as “accountable” plans. There are three criteria for a plan to be considered accountable. Without such a plan, expense reimbursement can be costly.