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What are Reimbursable Expenses?

Reimbursable expenses are expenses that an individual pays out of pocket and can be reimbursed by their employer or an insurance company. These expenses are typically related to work or other eligible expenses, such as medical or dependent care expenses.

Reimbursable expenses can vary depending on the specific plan and the employer. For example, a healthcare plan may cover certain medical treatments and procedures but not others, or a dependent care FSA may cover daycare expenses but not after-school care expenses. It’s important to carefully review the terms and conditions of any plan to understand what expenses are eligible for reimbursement.

Are Expense Reimbursements Taxable?

The tax treatment of expense reimbursements depends on the type of reimbursement and the nature of the expense being reimbursed.

Business expense reimbursements

If an employee receives reimbursement for a business expense that was incurred as part of their job duties, the reimbursement is generally not taxable. This is because the expense was not a personal expense and the reimbursement is intended to cover the cost of the business expense, rather than provide additional income to the employee. However, if the reimbursement exceeds the actual expense, the excess amount may be considered taxable income.

Medical expense reimbursements

If an employee receives reimbursement for a medical expense that was incurred as part of a qualified medical plan, such as a Flexible Spending Account (FSA) or Health Savings Account (HSA), the reimbursement is generally not taxable. This is because the expense was a qualified medical expense and the reimbursement is intended to cover the cost of the medical expense, rather than provide additional income to the employee.

Can you Reimburse yourself from HSA for the Prior Year’s Expenses?

Yes, you can reimburse yourself from a Health Savings Account (HSA) for eligible medical expenses incurred in prior years, as long as the expense was incurred after the HSA was established. There is no time limit for reimbursing yourself for eligible expenses from your HSA, as long as the expense was incurred after the HSA was established and you have not already been reimbursed for the expense.

Also, See: Moving Expense Reimbursement

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