Non-Accountable Plan

AAA

DEFINITION of 'Non-Accountable Plan'

A system under which a business provides payments to its employees to cover business expenses incurred for meals, travel, transportation, or entertainment, but under which the employee does not have to substantiate the expenses or return advance payments in excess of the amount actually used. By contrast, under an accountable plan, the employee must substantiate what the expense was, how much it was, and that it was incurred while doing business for the company. Any advances not used must be returned to the company.

INVESTOPEDIA EXPLAINS 'Non-Accountable Plan'

If a business gives an employee $100 to cover the cost of meals while away on a business trip, under a non-accountable plan, the employee could eat inexpensive fast food for every meal and pocket the savings. For this reason, the IRS treats payments made under non-accountable plans as taxable income. Accountable plan expenses are not considered taxable income.



RELATED TERMS
  1. Diner's Dilemma

    A game-theory situation with several players. Similar to a prisoner's ...
  2. Accountable Plan

    A plan for reimbursing employees for business expenses. Under ...
  3. Write-Off

    A reduction in the value of an asset or earnings by the amount ...
  4. Transportation Expenses

    An expense incurred by an employee or self-employed taxpayer ...
  5. Business Expenses

    Any expenses incurred in the ordinary course of business. Business ...
  6. Reimbursement Plan

    A generic term for several types of plans that reimburse employees ...
Related Articles
  1. Six Steps To A Better Business Budget
    Entrepreneurship

    Six Steps To A Better Business Budget

  2. Are You An Entrepreneur?
    Entrepreneurship

    Are You An Entrepreneur?

  3. Tax Credit For Plan Expenses Incurred ...
    Entrepreneurship

    Tax Credit For Plan Expenses Incurred ...

  4. How To Owe Nothing On Your Federal Tax ...
    Options & Futures

    How To Owe Nothing On Your Federal Tax ...

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center