How do you create an accountable plan?
David Jones
Updated on March 31, 2026
8 tips for running a valid accountable plan
- Make sure it’s truly a plan.
- Put it in writing.
- Reimburse correctly.
- Make sure the expense is reasonable.
- Satisfy the criteria for traveling expenses.
- Account adequately for the expenses.
- Keep proper documentation.
- Keep track of mileage.
What can be included in an accountable plan?
Accountable plans may include reimbursement for a number of different employee-related expenses, including:
- Employee travel expenses, including meals.
- Purchase of tools and equipment.
- Employee home office expenses.
- Mileage costs.
- Required uniforms not suitable for ordinary wear.
- Dues and subscriptions.
What is an accountable plan for an S Corp?
Accountable Plans Shift S Corporation Business Deductions From (Owner-)Employees To Employers. In short, an Accountable Plan is simply a reimbursement program, established by an employer, that allows employees to be reimbursed for business expenses they incur as part of their work.
What expenses can be reimbursed under an accountable plan?
Business-related expenses incurred by employees can include such things as travel, meals, lodging, entertainment, or transportation. Employees are required to adequately account for expenses with records and to return any excess reimbursement within a reasonable period of time.
What is the difference between an accountable plan and a non accountable plan?
For accountable plans, the reimbursement or excess amount is excluded from income and is not subject to withholding taxes. In non-accountable plans, the reimbursement or excess amount is included in income and subject to withholding taxes.
Can S Corp owners use the per diem method?
The per-diem allowance method can’t be used to substantiate business travel expenses incurred by a person who owns more than 10 percent of an S corporation. Instead, you must turn in proof of your actual travel expenses to the corporation. You can then receive tax-free reimbursements from the company.
How does an accountable plan work?
Accountable Plans A plan under which an employee is reimbursed for expenses or receives an allowance to cover expenses is an accountable plan only if the following conditions are satisfied: there must be a business condition for the expenses; the expense must be in connection with performance of services as an employee.
What is non-accountable allowance?
Generally, a non-accountable allowance paid to an individual for work-related expenses is considered a taxable benefit and is included as income for tax purposes. An allowance is considered non-accountable if the individual does not have to provide details or submit receipts to justify the amount they paid.
Can I write off Costco purchases?
Costco Business Members may be exempt from tax on warehouse purchases based upon their resale licenses or tax exempt status. So, we recommend that you either visit or call your local Costco warehouse for more information.
How are non-accountable events accounted for?
A non-accountable event that has anaccounting relevance may be recorded through memorandum entry. Types of Events or Transactions1. Non-reciprocal transfer – is a “one way” transaction in that the partygiving something does not receive anything in return while the partyreceiving does not give anything in exchange.
