Accountable vs. Nonaccountable Reimbursement Plans
Response to the following problem:
Martin works as a delivery person for a local restaurant. His job requires that he use his own personal car to deliver food to customers' homes. During 2014, Martin drives 4,300 business miles. His employer reimburses him $.35 a mile for each business mile.
a. Discuss the tax consequences of the $1,505 (4,300 × $.35) reimbursement Martin receives if his employer has an accountable reimbursement plan.
b. Same as Part a., except that the employer has a nonaccountable reimbursement plan.
c. What are the characteristics of an accountable reimbursement plan and what distinguishes it from a nonaccountable plan?