What is an accountable plan, and how does my S-Corp reimburse me for my home and car?
Short answer
An accountable plan is a written policy that lets your S-Corp reimburse you for business costs you pay personally, like the business share of your rent, utilities, phone and car. The business deducts the reimbursement, and it isn't taxable income to you.
Otavio Mayole, Co-founder, DeCypher FinancialsUpdated
Why S-Corp owners need one: once you're an S-Corp, you're an employee of your own company. Employees generally can't deduct unreimbursed work expenses on their personal return. Without a plan, your home office and car can stop being write-offs altogether.
How it works with us:
- You sign the plan. It's a short document that stays on file.
- You pay mixed costs personally, like rent, utilities, your phone bill and car costs.
- We calculate the business share: your home office by the square footage you use only for business, and your car by your mileage log.
- You submit a reimbursement sheet with the business percentages and supporting documents.
- The business pays you back from the business account, labeled as a reimbursement.
The IRS expects a business purpose, documentation within a reasonable time, and any excess returned. Starting mid-year? We can usually run a catch-up reimbursement for earlier months of the same year.
For many of our S-Corp clients, the accountable plan is where the biggest new deductions of the year come from.
These are not guarantees. Every creator's situation is different.