The Right Way To Ask Your C Or S Corporation For Travel Reimbursements

These are the basic rules you should adhere to when you work in and operate your business as a corporation:

You are an employee of the corporation.
The corporation is a legal entity separate from you.
The corporation is the business.
You can incur business expenses on behalf of the corporation
The corporation may reimburse you for the business expenses you incur on behalf of the corporation.

Now, for instance, if you incur expenses on behalf of your corporation but do not seek reimbursement from the corporation, the corporation gets no deduction because it has not paid anything.

What about deducting the expenses yourself?

If you considered deducting these expenses as “employee business expenses, your personal tax return may not work under the present tax law.

Won’t work in 2018-2025

The Tax Cuts and Jobs Act (TCJA) eliminated employee business expenses as a deduction for tax years 2018 to 2025. This means unreimbursed expenditures like travel, meals, lodging, mileage, and other business-related expenses are not deductible under Schedule A as itemized deductions.

What about 2026 and beyond? There are indications that lawmakers may extend the non-deductibility of employee business expenses – or even make this permanent.

Only Choice: Accountable Plan Reimbursement

Your best and only option is to submit an expense report to your corporation and get reimbursed. Tax law refers to these reimbursements as taking place under an accountable plan.

With a proper, accountable plan, you

Get reimbursed tax-free for your business expenses
Ensure your corporation gets the full deduction for the expenses reimbursed and
Maintain clear documentation, protecting yourself in case of an IRS audit,

How do you structure an accountable plan?

To ensure compliance, follow these basic steps while seeking reimbursement.

Keep detailed records. Document all business-related expenses, including receipts, mileage logs, and explanations of business purposes.
Submit an expense report. Provide a written statement to your corporation with details of the expenses.
Get reimbursed promptly. The corporation should pay you back within a reasonable time frame.
Avoid overpayments. If an advance reimbursement exceeds actual expenses, return the excess to the corporation.

Why does this matter?

Respect your corporation’s status as a separate legal entity, meaning you must honour the corporate procedures—even if you own 100 per cent of the stock. Properly structuring reimbursement through an accountable plan keeps you compliant, increases tax benefits, and prevents headaches with the IRS.

If you haven’t done so, create a formal reimbursement plan and submit expense reports. It is the right way to do business and the smartest way to keep more money in your pocket.

BergerCPAFirst, with over 30+ years of experience, offers comprehensive tax preparation services for individuals and businesses nationwide. Our commitment is to provide personalised attention while ensuring compliance and maximising tax benefits. If you have any questions or would like to schedule a consultation, please call (201) 587-9200 or inquire.