The Tax Cuts and Job Act eliminated out-of-pocket employee expenses from itemized deductions in 2018. The employees could no longer deduct out-of-pocket expenses.
An accountable plan is a policy that companies have in place to help employees and stockholders account for and receive tax-free reimbursement for business-related expenses.
What are the benefits of an Accountable Plan specifically for S Corps?
Owner-employees of S corporations are still entitled to deduct these costs because the accountable plan extends the deduction to the company. The company will subsequently be able to deduct those sums as if they had paid for the expenses out of the corporate account. The employee’s tax liability is decreased as a result.
The ability to receive reimbursement for using one’s house for business operations is another advantage for S corporations. This may include property tax, insurance, home maintenance, mortgage, and even repairs.
Take advantage of this valuable opportunity and Schedule Your Free Tax Assessment with us today to discuss about accountable plans and how they can benefit your business.