Is there a specific time period after which mileage reimbursement to an employee would be W-2 reportable? We have someone submitting almost a year's worth of work-related toll receipts. Is this reportable on the employee's W-2?

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We consulted with IRS information reporting specialist Ms. O’Roke (ID#1000269880) on the matter and got her confirmation that your company can decide within IRS guidelines how it wishes to handle this.  

Reimbursements made under the IRS-defined accountable plan are not reportable; but one of the stipulations of an accountable plan is that the employee provide documentation within a reasonable period of time. IRS Publication 15 defines “accountable plan” and lays out guidelines for what is a “reasonable period of time.” It suggests documentation submitted within 60 days is reasonable; the IRS does indicate that “reasonable” depends on facts and circumstances.

But given the IRS guideline, you might want to set a policy that any expense reimbursements involving documentation submitted more than 60 or 90 days after the expenses being incurred is outside the reasonable time set by your company, and therefore will be reported on the employee’s W-2. This gives you some enforcement “teeth.”

If you do report the reimbursement on the W-2, the employee can deduct the expense on his personal tax return.

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