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An accountable plan, however, is one where you submit an expense report to your employer and are directly reimbursed by your employer for the out of pocket expenses incurred. In this case the expense reimbursement is not reported as wages on your Form W-2.
Generally, the IRS requires taxpayers to record the following elements of every T&E and meal expense.
· The amount of expense;
· The time and place of the expense;
· The business purpose of the expense; and
· The business relationship to the taxpayer of the individuals being entertained.
In addition, the taxpayer must also keep evidence, such as a receipt, for any T&E and meal expense that is $75 or greater.
For cellphones, you can only deduct costs which are related to your business, so you
must establish the percentage of business use. Documentation may include a log or other ledger indicating when calls were made for business and personal reasons and the purpose for such business calls. Under the Cohan rule (named for a case involving
the famed Broadway showman George M. Cohan), the IRS may allow you to deduct a portion
of your expenses without documentation if you can
provide credible evidence of expenses.
Note that taxpayers have more leeway for employer-provided cellphones treated as fringe benefit. If an employer provides an employee with a cell phone primarily for non-compensatory business reasons, the business and personal use of the cell phone is generally nontaxable to the employee.
The IRS does not require record keeping of business use to receive this tax-free treatment.
A similar approach applies to arrangements common to small businesses that provide cash allowances and reimbursements for work-related use of personally-owned cell phones.
Deductible travel expenses while away from home include, but are not limited to, the costs of:
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Spencer Accounting Group, LLC does not provide investment, tax, legal, or retirement advice or recommendations in these blogs. The information presented here is not specific to any individual's personal circumstances.
Keana Spencer is an Accountant, Entrepreneur, and Educator to her clients, with a strong passion. Keana has over 10 years of experience and through her practice, she is a source of knowledge and strategies to her clients.