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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11592
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Do non-taxable reimbursements get reported on a 940 tax

Customer Question

Do non-taxable reimbursements get reported on a 940 tax return?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi Jason - No they do not

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These payments are exempt from FUTA tax because the payments aren't included in the definition of wages or the services aren't included in the definition of employment.

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You can find this in the instructions for 940 on page 7

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https://www.irs.gov/pub/irs-pdf/i940.pdf

Expert:  Lane replied 1 year ago.

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I hope this has helped.

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Please let me know if you have any questions at all.

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If this HAS helped, and you DON’T have other questions … I'd really appreciate a positive rating (using the rating request, faces, or stars on your screen)

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That’s the only way JustAnswer will credit us for the work here.

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Thank you!

Lane

I hold a JD (Juris Doctorate, a doctoral degree in the law), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security & Medicare, estate, corporate & tax advice since 1986.

Customer: replied 1 year ago.
I know that they are not taxable for FUTA but I am showing that they are included in reportable wages, then reduced out as exempt, the question is regarding showing them at all on the tax return.
Expert:  Lane replied 1 year ago.

Sorry, you said "on a 940 tax return"

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No they are not shown on the tax return at all if this is reimbursement of employee expenses under an accountable plan

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The only time a non-taxable reimbursement would be shown is if it WERE included in taxable wages (box 1 of the W-2), for some reason, and one of the items on the front of the 1040, e.g., Moving expenses.

Customer: replied 1 year ago.
I'm sorry but your answer is not correct, for example 125 deductions, that do not show in box 1 of the W-2 are reportable (then reduced in excluded wages before taxation).
Expert:  Lane replied 1 year ago.

What return are you talking about?

Expert:  Lane replied 1 year ago.

Your employer may report your cafeteria plan deductions in Box 14, which is labeled “Other.” It might use the code “Section 125” or “Café 125,” and then state your pretax payments. This data is optional and can clear up any confusion you have about the amount in Box 1. For example, the year-to-date gross amount on your last pay stub for the year shows all of your wages for the year, including your pretax payments. Box 1 of your W-2 shows only your taxable wages. If you add the amount in Box 14 to the amount in Box 1, it should equal the amount shown on your pay stub.

Expert:  Lane replied 1 year ago.

But there is no such thing as excluded wages on a 1040 ... Are you asking about an entity return? 1065, 1120-S, 1120?

Expert:  Lane replied 1 year ago.

Or is it possible that you are asking about INPUTS to a tax preparation software package?

Expert:  Lane replied 1 year ago.

Still with me?

Expert:  Lane replied 1 year ago.

OK, I still don't see you coming back into the chat here:

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First you asked about the 940. I answered that question

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Next you changed you question and said you were asking about showing non-taxable items on the tax return. I answered that question (correctly)

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Next you proceeded to tell me that this was incorrect, using §125 payments as an example. (125 payments are only an informational item on a W-2 but are NOT reported on the tax return).

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Now there are some items that have their own rules and reporting such as Taxable Scholarship and Fellowship Grant Income.

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For example, if the scholarship or grant were taxable, if you file Form 1040, include the taxable amount in the total on line 7. If the taxable amount was not reported on Form W-2, also enter “SCH” and the taxable amount on the dotted line next to line 7.

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Box 12 is another example; Your employer must report the cost of major medical, but your contributions to a health flexible spending account aren't reportable. The data in Box 12 is for informational purposes only, so employees know the cost of their health coverage.

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Your employer may also use Box 12 to report certain retirement plan contributions and nontaxable moving expenses, under the required codes

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SO as you see I need more specificity to help you. What WERE these items?

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I'll be here

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Lane

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I hold a JD (Juris Doctorate, a doctoral degree in the law), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security & Medicare, estate, corporate & tax advice since 1986.