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If you are reimbursing your employees for business use of their personal cell phones, you can include that as part of their wages, yes. You would still get a business deduction for that, because you are paying an "ordinary and necessary" expense for your company.
The disadvantages to the employees is that they have to pay tax on that income. If you paid the reimbursement under an accountable plan, they would not have to pay income tax on this.
Hello. Thanks for your answer.
You're welcome. Here's a good article on accountable plans. CLICK HERE
If we gross up the amount for payroll taxes, then there shouldn't be any disadvantages for the employees, right? since we pay for their payroll taxes
No, not if you're grossing it up. They should clear the same amount.
We are concerned with the logistics of grossing up the amount, since each employee has different tax rate, i.e., some who earned more than 102K will phase out on the SS tax, right?
Thanks for the info on the accountable plan.
It's $110K and yes, they phase out for social security at that level
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