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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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Is truck expense Taxable unemployement?

Customer Question

Is truck expense Taxable for state unemployement for employee?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

"expenses" are NOT taxable.
But wages paid to employees are taxable.
When you provide reimbursements for job related expenses - they may be excluded from taxable wages - if paid under an accountable reimbursements plan - and in this case excluded from unemployment taxes as well.

If reimbursements are not excludable - the unemployment taxes are calculated on total wages.

Expert:  Lev replied 1 year ago.

In order to qualify as an accountable plan, your reimbursement or allowance arrangement must require that your employees meet all three of the following rules:

1. There must be a business connection to the expenditure. This means that the expense must be a deductible business expense incurred in connection with services performed as an employee. If not reimbursed by the employer, the expense would be deductible by the employee on his/her 1040 income tax return.

2. There must be adequate accounting by the recipient within a reasonable period of time. This means that your employees must verify the date, time, place, amount and the business purpose of the expenses. Receipts are required unless the reimbursement is made under a per Diem Plan.

3. Excess reimbursements or advances must be returned within a reasonable period of time. Reasonable depends upon facts and circumstances.

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