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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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are ATM fees or currency conversion bank fees tax ...

Resolved Question:

are ATM fees or currency conversion bank fees tax deductible - specifically are the reimbursable under an accountable plan per IRS regulations?
Submitted: 6 years ago.
Category: Tax
Expert:  Lev replied 6 years ago.

ATM fees or currency conversion bank fees if paid for business purposes are considered business expenses and as such are deductible on the schedule C - http://www.irs.gov/pub/irs-pdf/f1040sc.pdf - line 10

If these fees are for personal purposes - these are non-deductible personal expenses.

If these fee are in connection with your investments - they are deductible on the schedule A - http://www.irs.gov/pub/irs-pdf/f1040sab.pdf - line 23 - subject of 2% florr limitation.

Customer: replied 6 years ago.
the fees are personal. they belong to an employee. they are asking to be reimbursed for the atm fee on their personal card. IRS said no because it is not an expense that they could personally deduct. IRS also said no to reimbursing the employee for currency conversion. They said it was like credit card annual fees, or any type of banking fee that is not reimbursable under an allowable plan. They said we could reimburse it and put it on the employee's W2 - can you confirm that is the case? are ATM fees incurred by employees an allowable expense that can be reimbursed under an accountable plan? thanks
Expert:  Lev replied 6 years ago.

The IRS is correct - if the employer pays or reimburses for any employee's personal - not job related - expenses - that amount is considered a compensation for services - and should be treated the same way as wages - thus should be reported on the W2 form, employment taxes are due.

Only employee's expenses that are job related may be reimbursed under an accountable plan and would not be included into employee's compensation.

Customer: replied 6 years ago.
Reply to LEV's Post: o.k. sorry one last go. the employee was on company business and had to get money from an ATM in a foreign country in order to pay for their expenses. so technically it was business. the IRS argument is they should have gotten the money before they left and even said "no" to the currency conversion fee. I am trying to find out where in the IRS regs it says this (they couldn't tell me) and I am having no luck. I know I saw something about credit card annual fees not being allowable but I can't seem to find that now either. employee does not want the amount to shouw up as income and I don't want to hassle with it either but I want to make sure I am doing this right. This person is going to be doing A LOT of travel for us. thanks for your help.
Expert:  Lev replied 6 years ago.

Thank you for clarification - so far we are talking about employee's business expenses - more specifically - travel expenses.

The point of the IRS agent is likely - that the fees to receive the money are not business expenses.

We need to consider the IRS publication 463 - http://www.irs.gov/pub/irs-pdf/p463.pdf - please see on the page 5 - Table 1-1. Travel Expenses You Can Deduct

Fees themselves are not business expenses, but should be viewed in connection with allowable business expenses. Thus, if the employee incurred ATM and currency conversion fees to pay for lodging - that fees should be included into lodging expenses; if these money were used for meal - that will be meal expenses, if the money were for a airplane ticket - that would be transportation expenses, etc.

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22638
Experience: Taxes, Immigration, Labor Relations
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