Business expenses that fall under the Accountable Plan Rules are not taxable to the employee and should be paid through Aggiebuy.
IRS Accountable Plan Rules:
- expenses must have a business connection
- must adequately account for these expenses within a reasonable period of time
- must return any excess reimbursement or allowance within a reasonable period of time
How to pay an accountable plan expense:
- Reimburse the employee via Aggiebuy – the employee would pay for the expense and provide a required receipt to TAMU for reimbursement, or
- Pay the vendor via Aggiebuy – TAMU would pay the vendor directly, to cover the period for which services were provided to TAMU. (Best option)
How not to pay an accountable plan expense:
- Allowance in Workday – Accountable plan expenses cannot be paid as an allowance in Workday. Paying a business expense as an allowance in Workday will produce a taxable event for the employee and thus produce a tax deduction on the amount of the allowance at the supplemental tax rate.