Accountable Plan
A one-page board resolution that lets the business reimburse you tax-free for legitimate business expenses you paid personally.
Why it exists
Post-TCJA (2018), W-2 employees can no longer deduct unreimbursed business expenses on Schedule A. An Accountable Plan flips those expenses into business deductions by having the company REIMBURSE the employee/owner tax-free.
What gets reimbursed
Home-office percentage of utilities/insurance/repairs/depreciation; cell phone business %; internet business %; mileage at the IRS standard rate; out-of-pocket travel and supplies.
The 3 IRS rules
1) Expenses must be business-related. 2) Employee must SUBSTANTIATE within a reasonable time (receipts, mileage logs). 3) Excess advances must be RETURNED. Get all three right and reimbursements are 100% tax-free to the recipient and deductible to the business.
Educational only — not tax, legal, or investment advice. Talk through your specific situation with a qualified advisor.