Accountable Plans: How Your Business Can Reimburse Employees (or Yourself) the Tax-Smart Way

If you run a business — whether you’re a YouTuber, Shopify store owner, filmmaker, dentist, medical practice, or local service provider — you or your team may incur expenses while doing work: travel, client meals, supplies, etc. How you reimburse (or pay back) those costs matters a lot.

Thanks to changes under the One Big Beautiful Bill Act (OBBBA), the rules for employee expense reimbursements are more important than ever. An accountable plan can help make reimbursements tax-free for employees and deductible for the business — but only if the plan meets strict rules.

At Velin & Associates, Inc., we help clients like creators, Amazon sellers, doctors, dentists, and high-net-worth professionals design these plans correctly so you don’t trigger extra tax burdens.

Why Accountable Plans Really Matter Now

Before the 2018 Tax Cuts and Jobs Act (TCJA), employees could deduct certain unreimbursed job expenses (mileage, supplies, travel) as miscellaneous itemized deductions (subject to a 2% floor). But TCJA suspended that. And now, under OBBBA, the suspension is permanent — employees can no longer deduct out-of-pocket business expenses on their individual tax returns.

That means if your business or clients are expecting you (or your employees) to cover costs and then get reimbursed:

• Without an accountable plan, those reimbursements are treated as wages. That means they are subject to income tax and payroll taxes (Social Security, Medicare) for both employer and employee.
• With a properly designed accountable plan, reimbursements can be tax-free — no payroll taxes, and the business still deducts the costs.

Because of this shift, accountable plans are becoming essential for companies that routinely incur expense costs (for example, paying for travel, lodging, meals, or supplies).

What Makes a Reimbursement Plan “Accountable”?

To keep reimbursements non-taxable under IRS rules, your plan must meet these four strict requirements:

If any of these fail, the “reimbursement” becomes taxable wages.

Additionally:

• Per diem rules: You can use fixed daily rates (federal per diem for meals, lodging, incidentals). If your per diem does not exceed the IRS (or GSA) published rate, you usually don’t need to collect a receipt for every expense.
• If you pay above per diem rates, the excess is taxable.

Plan must require return of excess advances, even when using per diem.

New Travel Per Diem Rates for 2026 (for Reference)

The IRS periodically updates per diem rates. For example, in recent updates, the federal per diem rate for lodging and meals in many U.S. locations increased (e.g. $225 standard, $319 in high-cost areas) for certain periods.

If your business uses per diems, stay updated with the GSA or IRS lists for your city or county.

Under an accountable plan, per diems within those allowable rates remain non-taxable and simpler to manage.

Practical Examples in Real Business Settings

Example 1: Content Creator / Youtube / TikToker

You send a videographer to shoot in another city.

• Under an accountable plan: You reimburse lodging, meals (per diem), and airfare. Videographer doesn’t pay income tax on reimbursements and you deduct them.
• Without a plan: You reimburse those costs as wages, and both sides pay payroll taxes on those reimbursements.

Example 2: Shopify Store Staff Reimbursements

An employee travels to meet a supplier in another state, buys materials, and incurs hotels & meals.

• With a formal accountable plan, those costs are reimbursed tax-free.
• If your policy is informal or you don’t require return of excess or substantiation, the IRS could reclassify the reimbursement as taxable income.

Example 3: Medical Practice / Dental Practice

Your clinicians travel to conferences, workshops, or to another location to serve patients.

• A carefully structured accountable plan ensures their reimbursements are tax-free and deductible for your practice.
• Without it, those reimbursements may increase your payroll tax burden and their personal taxable income.

Why This Matters to Your Business

• Your team (or contractors) are more willing to travel or incur expenses if they know they won’t be hit with tax bills.
• You save on employer-side payroll taxes and keep your deductions clean.
• You avoid surprises from audits or IRS scrutiny due to misclassification of reimbursements.
• Clear policies reduce confusion, ensure fairness, and protect your business.

Getting It Right: Tips for Setting One Up

1. Document everything: written policy, forms, timely expense reporting.
2. Stick to the rules: reimburse only business-related items, enforce return of excess amounts, follow deadlines.
3. Use per diems wisely: when set correctly, fewer receipts are needed.
4. Consistency matters: apply your plan uniformly and fairly.
5. Review annually: per diem rates change; make sure your plan stays updated.

Because the OBBBA made employee deductions for unreimbursed expenses permanently disallowed, now is the time to adopt or refine an accountable plan if you have any business that incurs reimbursable costs.

How Velin & Associates Can Help You

As your CPA for YouTubers, Shopify Store, Creators, Amazon Business, Dental Practices, Medical Practices, and High Net Worth Individuals, we know how to customize an accountable plan that fits your business structure and goals.

We’ll help you:

• Draft your reimbursement policy correctly
• Set up per diem schedules tailored to your business locations
• Train your team or contractors
• Administer advanced reimbursements, substantiation, and excess repayment
• Review and update over time

Let us reduce your tax risks and streamline expense reimbursements so your team can focus on creating, producing, selling, and serving — without worrying about tax surprises.

For more information about our tax planning services, contact us today: visit our website.

Velin & Associates, Inc

8159 Santa Monica Blvd STE 198/200 West Hollywood, CA 90046
323-902-1000
dmitriy@losangelescpa.org