If you have an S-Corp and don’t have an Accountable Plan (or AP), keep reading.
An AP is a specific type of allowable fringe benefit (Section 62(c) of IRC) by employers for their employees which allows tax-free reimbursement for certain expenses. This means you as the employee, can be reimbursed for expenses (eg home office) on a tax-free basis, while still taking the deduction on the side of the business.
If you’re an S-Corp, you are also an employee of the company, so this is a benefit you may be entitled to presuming you meet and adhere to qualifications.
There are three requirements for an AP reimbursements:
Most commonly - as reimbursement for home office expenses to owners (must be your primary place of business to qualify).
Typically, they create a home office allocation breaking down their personal verse business use of their home and create a quarterly reimbursement policy from the company to the employee for the agreed-upon amount.
Additionally to meeting the three requirements above, you must have a Written Policy for your AP, signed by your employee that lays out:
Here is a nice AP template provided by Intuit that covers the above items.
A simple 3-step onboarding process
After submitting your request, we review the information and then follow up via email to submit the necessary tax documents. Then, we'll schedule a time for your initial planning call.
In this meeting, we'll review your situation and determine where and how we can add value. We'll discuss which services may align best with your current & future needs.
After meeting & reviewing your situation, we prepare a multi-page proposal that shows you your potential tax savings & the different strategies we recommend.