Frequently asked questions

An accountable plan is a formal arrangement under IRC §62(c) and Reg. §1.62-2 that lets your business reimburse you (the owner, partner, or employee) for legitimate business expenses tax-free. The reimbursements aren't income to you, and the business still deducts them — best of both worlds.

To qualify, the plan must meet three rules: (1) the expenses must have a business connection, (2) you must adequately account for them (receipts, logs, this calculator), and (3) you must return any excess reimbursement.

Without an accountable plan, any reimbursement the business pays you is treated as taxable wages— subject to income tax and payroll tax. You'd also lose the ability to deduct most of those expenses personally (the TCJA suspended unreimbursed employee business expenses through 2025).

Net effect: an accountable plan can save 25–45% of the reimbursement amount in combined federal taxes vs. the alternative.

S-Corps, C-Corps, LLCs taxed as either, partnerships (for partners), and nonprofits. Single-member LLCs taxed as disregarded entities don't need one — there's no separate employer/employee. Pick your entity in the calculator so the form knows how to handle entity-specific rules like self-employed health insurance.

Quarterly is the firm's standard recommendation — it keeps substantiation timely and matches the calculator's Q1–Q4 layout. Reg. §1.62-2(g) requires that you substantiate expenses within a reasonable time, generally interpreted as within 60 days of incurring them.

Yes — for any individual expense $75 or more (lodging always, regardless of amount). Keep them with your records; the firm may request copies during review. The calculator captures the amounts; you keep the supporting documentation.

Enter your best estimate and flag it in the "Client / employee name" or business-name field, or note it in your email when you submit. The firm reviews each submission before processing, and we can adjust before the reimbursement is issued.

Drafts auto-save to your browser (localStorage) every few seconds as you type. If you close the tab and reopen the calculator on the same browser, your draft is restored. To start over, click Clear draft in the sidebar.

§280A requires regular and exclusiveuse of a portion of your home as your principal place of business. "Exclusive" means no personal use — a guest bedroom that doubles as your office doesn't qualify. The dedicated room or area, however small, does.

For owned homes, the business-use portion of your home is depreciable as nonresidential real property (39-year straight-line). You don't have to take it, but the IRS treats it as taken when you sell (recapture). Skipping it gives up the deduction now without avoiding the recapture later — usually not worth it.

Renters: leave Purchase Price / Improvements / Land blank and enter your annual rent on the Rent line. Depreciation automatically computes to $0.

Capital improvements increase the home's value or extend its life: additions, kitchen/bath remodels, new roof, HVAC replacement. Routine repairs (paint touch-ups, fixture replacements) are not improvements — those go in the quarterly non-recurring section.

Easiest: your property tax bill often separates land and improvements — apply that ratio to your basis. If not available, 20–30% of the basis as land is a reasonable estimate for most U.S. residential properties. Higher-COL urban areas can run 40%+.

Miles between business locations, to client sites, to the bank for business deposits, to the post office for business mail, etc. Commutingfrom home to your regular office is NOT business — even if you're self-employed. If your home is your principal place of business, everything else is.

A contemporaneous log of business trips: date, destination, business purpose, miles. Apps like MileIQ or a simple notebook both work. Don't reconstruct from memory at year-end — that's the #1 audit issue with mileage.

Auto loan interest and registration fees are pro-rated by business-use percentage (business miles ÷ total miles). The standard mileage rate already includes wear-and-tear, so it only applies to business miles directly.

For accountable-plan purposes through the business, the standard rate × business miles is the simplest. Actual expense method (depreciation + maintenance + insurance + fuel allocated by biz use %) is available but requires a different election and more recordkeeping. Talk to the firm if you'd rather go that route.

IRS audit history. The IRS will accept up to 80% business use for a mixed-use phone or internet line without intense scrutiny. Higher percentages invite questions and require strong documentation that personal use is minimal. If you have a dedicated business-only line, enter 100% under "Total" and skip the biz-use input — that's a different category.

For your reimbursement: 100%. You paid $50, the business reimburses you $50. That doesn't change with the deductibility limit.

For the business's deduction: §274(n) limits meals to 50% deductibility in most cases. A few exceptions exist (employee meetings, recreational expenses for employees, etc.). The firm handles that on the back end — don't adjust your reimbursement.

Generally not deductible to the business unless the spouse has a bona fide business purpose for being there (and is an employee, officer, or partner). When in doubt, leave them out and ask the firm.

Travel away from your tax home overnight for business. The destination has to be far enough that returning the same day isn't reasonable. Personal extensions to a business trip (extra days, side trips) should be excluded.

S-Corp shareholders who own more than 2% can't get tax-free health insurance through the corp. Premiums paid by the S-Corp must be added to the shareholder's W-2 as wages (Box 1, but not Boxes 3 or 5). The shareholder then deducts them above-the-line on their 1040.

Only fill in this line if the entity has already added the premiums to your W-2 wages and you're reconciling. If the S-Corp paid premiums directly without W-2 inclusion, talk to the firm — that needs to be corrected before year-end.

Partners don't get health insurance through accountable plans. The partnership reports premiums as guaranteed payments on Schedule K-1, and the partner deducts them on Form 1040. Leave that line blank if your entity is a partnership.

For C-Corps and nonprofits, employer-paid health insurance is generally excluded from employee income under §106 — no accountable plan reimbursement needed for the premiums themselves. This line is mainly useful if you (an employee/shareholder) personally paid premiums and the entity is now reimbursing you.

Treas. Reg. §1.62-2 doesn't literally require a written plan, but the Tax Court has repeatedly disallowed reimbursements as taxable wages when the taxpayer couldn't produce a written policy in effect beforethe expenses were incurred. The reg's three tests — business connection, substantiation, return of excess — are about the substance of the arrangement, and the cleanest way to demonstrate the substance to an auditor is a signed, dated document.

Practical rule: have the policy executed before the year starts (or, for a new entity, before the first reimbursement).

The auto-generated policy covers the eleven items the IRS audit guide looks for:

• Purpose and scope (§62(c) framing)
• Eligible Employees (or Partners, for partnerships)
• Reimbursable expense categories (Schedule A)
• Business-connection requirement
• 60-day substantiation deadline
• 120-day return-of-excess deadline
• Treas. Reg. §1.62-2(g) safe-harbor reference
• Tax treatment (non-wage when accountable; wage when not)
• Plan administration
• Effective date and amendments
• Governing law + adoption + signature blocks

Before any reimbursement-eligible expenses are paid out-of-pocket for the tax year, ideally Jan 1 (or the entity's first day, if newly formed). The policy defaults its effective date to Jan 1 of the tax year on the submission. Both signatures — the company officer and the eligible employee — should be dated on or before that effective date.

If a year is already in progress and there's no signed policy yet, sign it now, dated today, and acknowledge it covers expenses going forward. The IRS treats the substance as a question of fact — backdating a policy after expenses are incurred is the wrong move.

Strongly recommended but not strictly required. The minutes resolution — adopting the accountable plan policy by board action — provides belt-and-suspenders evidence the entity authorized the arrangement. Two paragraphs in the minutes book are enough; we can draft one on request if you don't already have a template.

Submissions go directly to info@potruscpa.com. A staff member reviews for completeness, runs sanity checks, and confirms the entity-level treatment before the reimbursement is recorded in the books.

Depends on the entity's reimbursement cadence — typically within the next quarterly close after submission. Talk to the firm if you need an off-cycle payment.

Email info@potruscpa.com with the correction. If the reimbursement hasn't been issued yet we can revise. If it has, we'll true it up against your next quarter.

IRC §280A(g) — sometimes called the “Augusta Rule” after the namesake city — lets a homeowner rent out their personal residence for up to 14 days per calendar year without including that rental income in gross income. The renter (in our case, your business) still gets to deduct the rent as an ordinary business expense.

Net effect: real cash moves from the business to the owner, the business deducts it, and the owner doesn't pick up taxable income on it. Done correctly, that's a clean shift of pre-tax money into your personal hands.

Four things, all of which the portal helps you document:

1. A written lease between you (the Landlord) and your business (the Tenant), signed before the rental days occur.
2. A fair-market daily rate supported by comparable event-venue listings (not residential rents).
3. A written itinerary for each rental day — attendees, business purpose, agenda.
4. Actual payment from the business to the owner, either by cash/EFT during the year or by year-end journal entry.

The IRS only allows the deduction at fair market value. In Sinopoli v. Commissioner (T.C. Memo 2023-105), the Tax Court disallowed a large Augusta deduction because the taxpayer based the rate on hotel ballrooms — not a fair comparable to a private home.

The portal walks you through the right kind of comparables: event/meeting space on Peerspace, Splacer, Tagvenue, or hotel meeting-room rate cards in your area. The rate you adopt should fall within the range those comps support.

No. The AI suggestions are a starting point, not documentation. The portal flags any AI-generated rate or itinerary as “unverified” until a human reviews and confirms it (or edits to match reality).

Treat the AI suggestions like a research assistant: it drafts plausible content quickly, you verify against actual listings or notes, and you click the “Verified” badge once you've confirmed.

A day on which the business actually uses the property for a bona fide business activity — board meetings, strategic planning retreats, training sessions, client receptions. Each day must be documented contemporaneously with a written itinerary (attendees + business purpose + agenda).

Don'tcount days where you happen to be home and do some work. The test is whether the day was deliberately set aside for the business's use of the space, with an external attendee or specific business objective.

You lose §280A(g) protection for the entire year, not just the days over 14. All rental income from the business becomes fully taxable. The portal shows you a running count and warns when you cross the threshold.

Yes, if documentation is finalized after year-end. The entry is DR Rent Expense / CR Owner Contribution (or owner equity, depending on your entity). The business still gets the deduction, you still pick up the tax-free rental income.

Cash payment during the year is cleaner — it leaves an actual bank trail — but the JE path is fully supportable. Choose “Owner contribution” in the Payment Plan step when this applies.

Attendees should be people with a genuine business reason to be present — co-owners, partners, employees, advisors, board members, prospective clients. Spouses and kids generally don't count unless they have a real role (e.g., your spouse who's a co-owner or employee of the entity).

The portal asks you to enter each attendee's name and role — list the role honestly. An auditor reading “CEO”, “CFO”, “outside counsel” reads very differently from “spouse” with no further detail.

Ideally yes — best practice is a signed lease before the first rental day. The portal generates an executable lease naming both parties, the term, the daily rate, and the §280A(g) 14-day cap. Sign and date it before the first business-use day, retain a copy.

Exhibit A lists the anticipated business-use dates. You can update it as actual events get scheduled.

The three deliverables (Fair Market Value Study, Itinerary, Lease Agreement) are emailed to you and to Potrus CPA. You can still:

• Edit anything — click Edit submission in the sidebar, make changes, save automatically.
• Re-submit— once you've made changes, click Re-submit to email a fresh copy of the three deliverables to both sides. The subject line indicates it's an update.
• Download or print — open each of the three PDFs directly from the sidebar, save or print as needed.