10. Which of the following statements is true with regard to the reimbursement o

Question

10. Which of the following statements is true with regard to the reimbursement of employee business expense? A. Excess reimbursements of ordinary and necessary expenses are never subject to withholding. B. Provided that reimbursements are received by an employee under a plan which requires the employee to substantiate the expenses to his employer, the amounts are excluded from the definition of wages subject to withholding, without regard to whether the employee actually substantiates the expenditures. C. Reimbursements of ordinary and necessary expenses are subject to federal income tax withholding. D. Reimbursements received by an employee under a plan which contains a requirement to return excess amounts, and the employee does so on a timely basis, are excluded from the definition of wages subject to withholding. E. All of these choices are true. 10. Which of the following statements is true with regard to the reimbursement of employee business expense? A. Excess reimbursements of ordinary and necessary expenses are never subject to withholding. B. Provided that reimbursements are received by an employee under a plan which requires the employee to substantiate the expenses to his employer, the amounts are excluded from the definition of wages subject to withholding, without regard to whether the employee actually substantiates the expenditures. C. Reimbursements of ordinary and necessary expenses are subject to federal income tax withholding. D. Reimbursements received by an employee under a plan which contains a requirement to return excess amounts, and the employee does so on a timely basis, are excluded from the definition of wages subject to withholding. E. All of these choices are true. A. Excess reimbursements of ordinary and necessary expenses are never subject to withholding. B. Provided that reimbursements are received by an employee under a plan which requires the employee to substantiate the expenses to his employer, the amounts are excluded from the definition of wages subject to withholding, without regard to whether the employee actually substantiates the expenditures. C. Reimbursements of ordinary and necessary expenses are subject to federal income tax withholding. D. Reimbursements received by an employee under a plan which contains a requirement to return excess amounts, and the employee does so on a timely basis, are excluded from the definition of wages subject to withholding. E. All of these choices are true.

Explanation / Answer

Reimbursement of employee business expense:

An amount spent by employee for business related expense which is later reimbursed by employer to such employee.

Those expenses are not required to report along with wages and salaries. but these expenses incurred must be connected to business of employer. The employee must substantiate his business expense with proper evidence and should submit such expenses in a reasonable period of time

The following statement true with regard to the employee business expense:

D. reimbursement expenses received by an employee under a plan which contains a requirement to return excess amounts and the employee does so on timely basis are excluded from the definition of wages subject to withholding

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