How do I determine travel expense reimbursement?

Because reimbursing an employee’s travel expenses isn’t mandated by federal law, in most states you’re free to determine which specific expenses you’ll reimburse. Advantages of Reimbursement Travel expenses, and reimbursement of employees’ travel expenses, are considered a legitimate business expense that can be deducted from a company’s income taxes. For this reason, it can be […]

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2018 HSA contribution limit

Because reimbursing an employee’s travel expenses isn’t mandated by federal law, in most states you’re free to determine which specific expenses you’ll reimburse.

Advantages of Reimbursement

Travel expenses, and reimbursement of employees’ travel expenses, are considered a legitimate business expense that can be deducted from a company’s income taxes. For this reason, it can be advantageous to both employers and employees to have a reimbursement policy for travel expenses.

Types of Expenses

As the granter of optional reimbursements, you can decide if you’ll reimburse employees’ business related travel expenses, and which ones specifically. That said, you need to make sure that you’re treating employees equally when it comes to reimbursements, so establishing a clear reimbursement policy is advisable.

Examples

  • You could choose to limit your reimbursements to necessary equipment, materials, and transportation costs.
  • Or, you could choose to include other expenses that are naturally incurred during travel such as, eating out, lodging, etc.

Whichever expenses you do reimburse, get specific about when and where business expenses may be incurred.

For example, you could cover an employee’s meals from the minute they get on the plane to depart until the minute they get off the plane on their return. You could even agree to an additional meal at the airport before they board the plane. Or, you could limit their reimbursements to one meal per day while staying at their destination. Consider whether you’ll reimburse airfare only, or taxis, buses, and trains as well.

Final Tips

It’s important to establish a clear reimbursement policy and make sure your employees know what is and isn’t eligible. Before an employee goes on a business trip, it’s a good idea to review not only what is eligible for reimbursement, but also the proper way to document and collect receipts to ensure that the reimbursement process goes smoothly once they’ve return.

Helpful Links:

Reimbursement of Travel Expenses – employment-law.com – Solid advice for the requirements involved

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