Reimbursement of expenses is fullty exempted or taxable?

Question

pls. uregently let me know the reimbursement of expenses is fully taxable or exempted in income tax.

Answer 1

Re US Federal Income Tax reimbursement of expenses is taxable to the extent that you took a deduction for the expense.  For ex if you took a deduction for education expenses in 2007 return and on completion of the course in 2008 your employer reimbursed that expense the reimbursement would be deductible.  However if it is something that you did not use as a deduction say a weekly vehicle reimbrsement for use of your own car on the job it is not taxaqble. For further clarification re a specific situation clarification please see a tax professional and btw the cost of doing the tax professional's help is deductible on your income tax.

Answer 2

If you reported your expenses in detail to your employer and were reimbursed for the amount you spent, it wouldn't normally be taxed if they were legally allowable expenses.  You'd most likely get a separate expense check from your employer, without taxes withheld, and it wouldn't be shown on your W-2.  But if you got a blanket amount, it would very likely be shown as taxable, then you'd have to deduct the specific expenses on your tax return.

Answer 3

Whether your reimbursements are taxable or not depends on

1.  Whether your reimbursement is from an accountable plan or not

2.  Whether your expenses would be deductions if you were not reimbursed.

If you have an accountable plan and your expenses would have been deducted as business expenses, the reimbursements are not taxed.  

An accountable plan is one for which your expenses are related to your business activities, you provide an accounting of your expenses to your employer, and you return any excess reimbursement to your employer.  

If your reimbursements are taxes, your reimbursements are added to your wages, and you may be able to take a deduction for them.