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  • Reimbursement

    I recently signed a contract for a job I will start next August. Part of the contract gives me up to $9,000 in reimbursements during the remainder of my training for any board exams I have to take or board prep (Gen cards, nuclear, ct, echo, vascular - it all adds up). The group told me I have two options:

    1. I can send them receipts for everything and they will reimburse me as I go.
    2. Whenever I am ready to purchase I just let them know and they pay it for me upfront.

    Is there any tax benefits for doing one over the other? If I do option 1, do I have to report those reimbursements for tax purposes as income or gifts?


  • #2
    Either should have the same impact - which is zero effect on your taxes. What you have described is an accountable plan - deductible to the employer, non-taxable to you, but you need to get a guarantee that they understand this definition, also. But I w/rec you clarify with them that these reimbursements will not be added to W2 wages and will be treated as an “accountable plan”. Might want to get that clarified in writing if it is not detailed in the contract you signed.

    To the lurkers out there: while it is important to get a legal review of a contract, this is a good example of how it can also benefit to include your CPA and/or FP before signing. No disregard to Hammock, very common to leave the CPA out of the process b/c the atty is always emphasized. But contract review atty’s don’t necessarily consider all tax impacts and interactions.
    My passion is protecting clients and others from predatory and ignorant advisors 270-247-6087 for CPA clients (we are Flat Fee for both CPA & Fee-Only Financial Planning)
    Johanna Fox, CPA, CFP is affiliated with Wrenne Financial for financial planning clients


    • #3
      Thank you, very helpful.