What is a reimbursable expense?

A reimbursable expense is any ordinary and necessary cost incurred on behalf of a business that the company agrees to repay. These expenses are typically outlined in a company’s expense or reimbursement policy and must be directly related to business activities. To qualify, expenses usually need to be reasonable, properly documented, and submitted within a specified timeframe.

How to categorize reimbursable expenses

Record reimbursed amounts under the appropriate expense category (e.g., Travel, Meals, Office Supplies), not payroll.
Use an “Employee Reimbursements” or clearing account temporarily if needed before categorizing.
Require itemized receipts and clear business purpose for each expense.
Follow a written reimbursement policy that defines eligible expenses and limits.
Reimburse only reasonable and business-related costs to remain compliant with tax rules.

Examples of reimbursable expenses

Business travel costs such as airfare, lodging, and ground transportation.
Meals purchased during business trips or client meetings (subject to company policy).
Mileage or fuel for personal vehicles used for work purposes.
Office supplies or equipment purchased for business use.
Conference, training, or certification fees.
Internet or phone expenses when used for work (fully or partially, if allowed).
Client entertainment or business-related events, if permitted.

Tax implications for reimbursable expenses

Reimbursements under an accountable plan are not taxable to employees.
Expenses must have a clear business purpose and be substantiated.
Non-accountable plan reimbursements may be treated as taxable income.
Businesses can deduct reimbursable expenses as ordinary business expenses.
Poor documentation or overly generous reimbursements may trigger audits or reclassification as wages.