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Old 08-14-2013, 05:39 PM
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Repayment of Business Expenses to Employer

In 2012 I had about $20,000 in business expenses. My employer reimbursed me for $12,000 of that (It was included on my pay stub but tax free). So, on my tax return I had a net deduction of $8,000 of unreimbursed business expenses under miscellaneous on Schedule A (less the 2% of AGI requirement).

I have to be with my employer for more than a year to keep that money. So, if I were to leave in 2013 I will have to pay the $12,000 back. If I do leave, is that money tax deductible in 2013? The reason I ask is because although I didn't pay taxes on the $12,000 I would have been able to deduct it from my income in 2012 had I known that I wasn't going to end up being reimbursed for that expense. How do I go about deducting this in 2013? Or, do I have to file an ammended 2012 return? Thanks for the help



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Old 08-16-2013, 02:52 AM
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Originally Posted by km782 View Post


#1;In 2012 I had about $20,000 in business expenses. My employer reimbursed me for $12,000 of that (It was included on my pay stub but tax free). So, on my tax return I had a net deduction of $8,000 of unreimbursed business expenses under miscellaneous on Schedule A (less the 2% of AGI requirement).

#2;I have to be with my employer for more than a year to keep that money. So, if I were to leave in 2013 I will have to pay the $12,000 back. If I do leave, is that money tax deductible in 2013?

#3;The reason I ask is because although I didn't pay taxes on the $12,000 I would have been able to deduct it from my income in 2012 had I known that I wasn't going to end up being reimbursed for that expense.


#4;How do I go about deducting this in 2013? Or, do I have to file an ammended 2012 return? Thanks for the help
#1;Correct;in general, employee expenses reimbursed under an employer’s accountable plan are not considered income to the employee for federal income tax purposes. In contrast, employee expenses reimbursed under a nonaccountable plan are considered income to the employee and are subject to withholding; the employee is generally limited (due to AGI) on any offsetting deductions they may be able to claim on Form 2106 or Sch A under the 2% of AGI requirement.

#2;Yes UNLESS you deduct it on your 2012 return( I mean unless the $12K was non-taxable), you can report it on your 2013 return for deduction (on Sch A of 1040)when you actually pay it.

#3;Correct.So as you didn't pay taxes on the $12K on your 2012 return, you would have been able to deduct it from your income in 2012, you need to report it as income on yur 2013 return.You can’t deduct it on your 2013 return since you already deducted it on your 2012 return.

#4;You need to report the $12K as your taxable income on your 2013 return in lieu of filing an amended 2012 return. As long as you want to deduct the $12K on your 2013 return, you need to file amended return for 2012 return.



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Old 08-20-2013, 09:39 PM
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Originally Posted by Wnhough View Post
#1;Correct;in general, employee expenses reimbursed under an employer’s accountable plan are not considered income to the employee for federal income tax purposes. In contrast, employee expenses reimbursed under a nonaccountable plan are considered income to the employee and are subject to withholding; the employee is generally limited (due to AGI) on any offsetting deductions they may be able to claim on Form 2106 or Sch A under the 2% of AGI requirement.

#2;Yes UNLESS you deduct it on your 2012 return( I mean unless the $12K was non-taxable), you can report it on your 2013 return for deduction (on Sch A of 1040)when you actually pay it.

#3;Correct.So as you didn't pay taxes on the $12K on your 2012 return, you would have been able to deduct it from your income in 2012, you need to report it as income on yur 2013 return.You can’t deduct it on your 2013 return since you already deducted it on your 2012 return.

#4;You need to report the $12K as your taxable income on your 2013 return in lieu of filing an amended 2012 return. As long as you want to deduct the $12K on your 2013 return, you need to file amended return for 2012 return.
Thank you very much for your response. I am a little lost on #3 and 4. Why do I need to report the $12k as income on my 2013 return? I received the money in 2012, not 2013. It was treated as a non-taxable payment (not included in my income).

Also, sorry if I wasn't very clear, but I didn't deduct the $12k in 2012. I only deducted $8k of the $20k total, which after reimbursement was my out of pocket cost.

My thinking is that those are expenses that normally are deductible, assuming I hadn't been reimbursed. Since I will pay my employer the $12k in 2013 (which is basically a delayed payment for business expenses in 2012) shouldn't they be deductible in 2013? In other words, since I have to pay my employer back they haven't reimbursed me for anything and so shouldn't I be able to deduct them since I end up paying the full $20k out of pocket? ($8k in 2012 and $12k in 2013)

Thanks again.



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Old 08-21-2013, 06:39 AM
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Originally Posted by km782 View Post


#1: I am a little lost on #3 and 4. Why do I need to report the $12k as income on my 2013 return? I received the money in 2012, not 2013. It was treated as a non-taxable payment (not included in my income).



#2:Also, sorry if I wasn't very clear, but I didn't deduct the $12k in 2012. I only deducted $8k of the $20k total, which after reimbursement was my out of pocket cost.

#3;My thinking is that those are expenses that normally are deductible, assuming I hadn't been reimbursed. Since I will pay my employer the $12k in 2013 (which is basically a delayed payment for business expenses in 2012) shouldn't they be deductible in 2013? In other words, since I have to pay my employer back they haven't reimbursed me for anything and so shouldn't I be able to deduct them since I end up paying the full $20k out of pocket? ($8k in 2012 and $12k in 2013)

.
#1;Sorry it is my bad you are correct as you said, you received the money of $12K in 2012, but you didn't pay taxes on the $12K on your 2012 return( as it was not included in your income);however, you also said that you have to be with your employer for more than a year to keep that money. So, if you were to leave in 2013 you will have to pay the $12,000 back to your ER. In this case, as you said you do not need to report the money on your 2013 return as taxable income since you pay it back to your ER. However, on your 2013 return, you can’t deduct it either as you didn’t pay tax on it on your 2012 return. This is what I meant. ALSO read below.



#2;Correct as mentioned above; you didn’t pay any tax on $12K on your 2012 return (even though you didn’t deduct it on your 2012 return). But you need to pay back to your ER in 2013, then you can’t deduct it on your 2013 return (as it was not reported as income on your 2012 return). ALSO the money is NOT reported as your taxable income on your 2013 return since you just pay it back to your ER .

#3;As long as the whole of $20K was out of your pocket, then as you said, you can deduct the money of $12K( or the whole of $20K UNLESS you deducted the money of $8K on your 2012 return) on your 2013 return as EE business expenses on From 2106 and Sch A of 1040. AS LONG AS the whole of $20K was out of your pocket and you need to pay back $12K to your ER, you can deduct the whole of $20K on your 2013 return UNLESS you deducted $8k on your 2012 return.



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Old 08-21-2013, 10:02 PM
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Originally Posted by Wnhough View Post
#1;Sorry it is my bad you are correct as you said, you received the money of $12K in 2012, but you didn't pay taxes on the $12K on your 2012 return( as it was not included in your income);however, you also said that you have to be with your employer for more than a year to keep that money. So, if you were to leave in 2013 you will have to pay the $12,000 back to your ER. In this case, as you said you do not need to report the money on your 2013 return as taxable income since you pay it back to your ER. However, on your 2013 return, you can’t deduct it either as you didn’t pay tax on it on your 2012 return. This is what I meant. ALSO read below.



#2;Correct as mentioned above; you didn’t pay any tax on $12K on your 2012 return (even though you didn’t deduct it on your 2012 return). But you need to pay back to your ER in 2013, then you can’t deduct it on your 2013 return (as it was not reported as income on your 2012 return). ALSO the money is NOT reported as your taxable income on your 2013 return since you just pay it back to your ER .

#3;As long as the whole of $20K was out of your pocket, then as you said, you can deduct the money of $12K( or the whole of $20K UNLESS you deducted the money of $8K on your 2012 return) on your 2013 return as EE business expenses on From 2106 and Sch A of 1040. AS LONG AS the whole of $20K was out of your pocket and you need to pay back $12K to your ER, you can deduct the whole of $20K on your 2013 return UNLESS you deducted $8k on your 2012 return.
Ok, that makes sense. Thank you very much for the explanation.



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