Lesson: Taxability of Employer Reimbursement

In this lesson, delve into the nuances of employer reimbursement and the implications it holds for employees' taxable income. Nick lays out the distinction between non-accountable plans, where employees aren't required to substantiate or return their business expense reimbursements, and accountable plans, which offer different tax treatments. He clarifies the taxability of reimbursements under non-accountable plans, highlighting that they are included in the employee's wages on Form W-2 and subject to various payroll taxes. Nick also revisits historical tax code changes, explaining how the suspension of miscellaneous itemized deductions from 2018 through 2025 alters the benefits of non-accountable plans. He supplements the discussion with relatable examples to illustrate how these reimbursements are reported as income, and offers practical tips on interpreting Form W-2 for both real-world application and exam preparation.