Records
Accountable plan
An arrangement under which a business reimburses an owner or employee for business expenses without the reimbursement being taxable pay.
Three conditions: the expense has a business connection, it is substantiated to the business within a reasonable time, and any excess advance is returned.
Meet them and the reimbursement is deductible to the business and untaxed to the recipient. Miss them and the money is wages.
It matters most to S-corp owners, for whom it is the ordinary route to getting home-office and vehicle costs out of the company without payroll tax.