Hello,Customer You have a very good question. There are different reimbursement plans a company can use to determine how an employee's reimbursement is treated when it comes to taxes.
An accountable plan is one in which, reimbursement is not subject to federal taxes.
These are the three requirements for an accountable plan:
If these three requirements are not met, the plan is considered to be a nonaccountable plan, in which the reimbursement is subject to federal taxes (including social security and medicare taxes).
You can view this article at: http://www.irs.gov/govt/fslg/article/0,,id=164471,00.html