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If I am a blind CEO. My employment contract provides for travel

allowance in the amount of...
If I am a blind CEO. My employment contract provides for travel allowance in the amount of $600 a month for associated expenses the CEO commuting from his home to base office. The CEO travel allowance may include out of pocket reimbursements for taxis, drivers or other options. I do not keep copies of any receipts and do not provide accounting department with any supporting documentation.

Should the $600 be reported as income? Taxable income? Is there any ADA or IRS regulation that would exempt someone from reporting this income?
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Answered in 11 minutes by:
9/6/2013
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,133
Experience: Taxes, Immigration, Labor Relations
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Lev :

Hi and welcome to Just Answer!
In general - travel allowances paid to employees are included into income as wages. Such reimbursements are reported on W2.
Reimbursements are not included into wages if paid under accountable reimbursement plan.
You still may deduct your job related travel expenses - as long as such expenses are otherwise deductible.

Lev :

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.
Since you are not required to report back how travel allowances are used - it seems that it is NOT an accountable reimbursement plan - and your employer is correct reporting such payments as wages.


Lev :

To claim a deduction of your job related expenses (including travel expenses) - you need to keep copies of receipts, travel log and other supporting documents.

Customer:

Is there any tax consideration, taking into consideration I am blind (cannot drive and need assistance to go to office)?

Lev :

Yes - you may deduct such expenses as job related travel expenses - but still you need to keep supporting documents.

Lev
Lev, Tax Advisor
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Please see fro reference IRS publication 463 page 36 -
http://www.irs.gov/pub/irs-pdf/p463.pdf

Impairment-Related Work Expenses of Disabled Employees
If you are an employee with a physical or mental disability, your impairment-related work expenses are not subject to the 2%-of-adjusted-gross-income limit that applies to most other employee business expenses. After you complete Form 2106 or 2106-EZ, enter your impairment-related work expenses from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 28, and identify the type and amount of this expense on the dot-ted line next to line 28. Enter your employee business expenses that are unrelated to your disability from Form 2106, line 10, or Form 2106-EZ, line 6, on Schedule A (Form 1040), line 21.
Impairment-related work expenses are your allowable expenses for attendant care at your workplace and other expenses in connection with your workplace that are necessary for you to be able to work.
You are disabled if you have:
A physical or mental disability (for example, blindness or deafness) that function-ally limits your being employed, or
A physical or mental impairment (for example, a sight or hearing impairment) that substantially limits one or more of your major life activities, such as performing manual tasks, walking, speaking, breathing, learning, or working.
You can deduct impairment-related expenses as business expenses if they are:
Necessary for you to do your work satisfactorily,
For goods and services not required or used, other than incidentally, in your personal activities, and
Not specifically covered under other income tax laws.
Example 1. You are blind. You must use a reader to do your work. You use the reader both during your regular working hours at your place of work and outside your regular working hours away from your place of work. The reader's services are only for your work. You can deduct your expenses for the reader as business expenses.
Example 2. You are deaf. You must use a sign language interpreter during meetings while you are at work. The interpreter's services are used only for your work. You can deduct your expenses for the interpreter as business expenses.
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