can an employer count petty cash as income on a W2? It was for reimbursement when I had to pay for misc expens

Answer 1

Reimbursements should not be on a W-2, especially BOX 1.

The employer MUST correct the W-2 if he did this.

Answer 2

Generally, reimbursement for business expenses should not be included as income on a W2. The only reason that it would be included in W2 is that your employer does not have what is called an accountable plan.

An accountable plan means that your employer keeps track of all the receipts and verifies all expenses (usally by requiring the original receipt from you) are ordinary and necessary for the business. Any excess over cost they may advance or give to you as you claim is not required to be returned to the employer. Any excess not returned within a "reasonable time" would also be deemed includable in wages (usually 30, 60, or 120 days depending).

Definitely for an employee, accountable plans are more desirable than nonaccountable plans. However, for employers, nonaccountable plans are easier to do. For an employee, you would then have to deduct these expenses (as they are included in income) by itemizing and putting them as miscellaneous itemized deductions (2% of your adjusted gross income threshold before you see any benefit, if even).

Is there a reimbursement policy at your company? You would need that statement in order to back up any employee business expenses you claim as itemized deductions. Just in case the IRS comes calling.

Answer 3

I have never heard of reimbursement for petty cash being income. You are just buying things for the company indirectly. You pay and they pay you back. You have no income.

Answer 4

But you already paid taxes on the money you spent for misc expenses(when you earned it the first time). I would say no. You're not gonna pay taxes on your money twice. By the way... do u know anything about myspace? People are not answering today. too much football- and no work today-lol theyre all asleep-Grmph