Keep these basic rules in mind when you work in and operate your business as a corporation:

You are an employee of the corporation.

The corporation is a legal entity separate from you.

The corporation is the business.

You can incur business expenses on behalf of the corporation.

The corporation may reimburse you for the business expenses you incur on behalf of thecorporation.

Now, let’s say you incur expenses on behalf of your corporation but you don’t seek reimbursement from thecorporation. The corporation gets no deduction because it has not paid for anything.

What About Deducting the Expenses Yourself?

If you were thinking of deducting these expenses as “employee business expenses” on your personal tax return,that won’t work under current tax law.

Won’t Work in 2018-2025

The Tax Cuts and Jobs Act (TCJA) eliminated employee business expenses as a deduction for tax years 2018through 2025.1 This means that unreimbursed expenses—such as travel, lodging, meals, mileage, and otherbusiness-related costs—are not deductible on Schedule A as itemized deductions.

What about 2026 and beyond? Time will tell, but current indications suggest that lawmakers may extend the non-deductibility of employee business expenses—or even make this permanent.

Accountable Plan Reimbursements

Your best and only option is to submit an expense report to your corporation and get reimbursed. Tax law refers tothese reimbursements as taking place under an accountable plan.

With a proper accountable plan,2 you

get reimbursed tax-free for your business expenses;

ensure your corporation gets the full deduction for the expenses reimbursed; and

maintain clear documentation, protecting yourself in case of an IRS audit.

How to Structure an Accountable Plan

To ensure compliance, follow these basic steps when seeking reimbursement:

Keep detailed records. Document all business-related expenses, including receipts, mileage logs, andexplanations of business purposes.

Submit an expense report. Provide a written statement to your corporation with details of theexpenses.

Get reimbursed promptly. The corporation should pay you back within a reasonable time frame.

Avoid overpayments. If an advance reimbursement exceeds actual expenses, return the excess tothe corporation.

Why This Matters

You must respect your corporation’s status as a separate legal entity.

This means honoring corporate procedures—even if you own 100 percent of the stock. Properly structuringreimbursements through an accountable plan keeps you compliant, maximizes tax benefits, and avoids headacheswith the IRS.

If you haven’t already done so, put a formal reimbursement plan in place and start submitting those expensereports. It’s the right way to do business—and the smartest way to keep more money in your pocket.

Accountable Plan Reimbursements: The Right Way to Get Paid Back

The best—and only—way to ensure tax-compliant reimbursements is by submitting an expense report to your corporation. These reimbursements fall under what tax law calls an accountable plan.

A properly structured accountable plan allows you to:
✅ Receive tax-free reimbursement for your business expenses.
✅ Ensure your corporation gets the full tax deduction for those expenses.
✅ Maintain clear documentation, keeping you protected in case of an IRS audit.

Setting Up an Accountable Plan

To stay compliant and maximize tax benefits, follow these key steps:

📌 Keep detailed records. Track all business-related expenses, including receipts, mileage logs, and the purpose of each expense.

📌 Submit an expense report. Provide a clear, written breakdown of your expenses to your corporation.

📌 Get reimbursed promptly. Your corporation should issue reimbursement within a reasonable time frame.

📌 Return excess funds. If an advance reimbursement exceeds actual expenses, pay back the difference.

By following these steps, you ensure tax efficiency, compliance, and proper record-keeping, keeping more money in your pocket while staying on the IRS’s good side.

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