||The examples and perspective in this article deal primarily with the United States and do not represent a worldwide view of the subject. (March 2009)|
An expense account is the right to reimbursement of money spent by employees for work-related purposes.
US tax treatment of expense accounts
In the United States, the use of an expense account can be traced back to George Washington, who chose to forego a salary and relied on an expense account to cover his purchases during his military leadership in the American Revolution.
Under today's tax laws of the United States, expense accounts are treated as either "accountable" or "unaccountable". Accountable expense accounts are subject to a variety of restrictions. Accountable expense accounts are subject to a variety of Internal Revenue Service regulations. There must be a documented business purpose for the account. Spending from the account must be documentable, typically by means of receipts. Any money entrusted to the employee from the account that is not spent for business purposes and accounted for must be returned to the employer.
Money paid to an employee under an accountable expense account is not treated as taxable income to the employee. Money paid to an employee under an unaccountable plan is treated as income to the employee. Business expenses paid out of an nonaccountable plan are deductible from the employee's taxable income only as miscellaneous itemized deductions, and even then, they are only deductible if the expenses are equal or greater than 2% of the employee's income.
Special rules govern certain types of business expenses, including rules for travel, entertainment, food, and gifts.
- Brian Satterfield (May 29, 2008). "5 Tales of Outrageous Expense Account Abuse". HR World. Retrieved 2009-03-13.
- Marvin Kitman (2001). George Washington's Expense Account. Grove Press. ISBN 0-8021-3773-3.
- Internal Revenue Service, Publication 535 (2007), Business Expenses, ch. 11: Reimbursement of Travel, Meals, and Entertainment
- Internal Revenue Service, Publication 463 (2008), Travel, Entertainment, Gift, and Car Expenses, 2008 version.
- Paul Burnham Finney (June 26, 2006). "A high-tech tool to track expense account abuse". International Herald Tribune. Retrieved 2009-03-13.
- That Expense-Account Science, The New York Times, June 6, 2008
- The Most Common Expense Account Abuses, BusinessWeek
|This accountancy-related article is a stub. You can help Wikipedia by expanding it.|