Cash Allowance

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DEFINITION

An allowance that is paid out in cash, instead of being reimbursed at a later date. Employers usually give cash allowances to employees in order to cover the costs of, for example, meals and lodging.

INVESTOPEDIA EXPLAINS

Cash allowances are considered taxable income to the employee, like wages and salaries. The employee can then claim employment-related expenses against the increase in income.


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