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.

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.