You are allowed to reimburse any business expenses under an accountable plan, which means that if the expense would be reimbursable (and not taxable) to a U.S. citizen, then you can reimburse your non-U.S. visitor in the same manner. However, reimbursem*nts for expenses that are classified as “non-accountable plan” reimbursem*nts are generally taxable and reportable to the recipient. Note: that for individuals traveling on B visa status (or equivalent visa waiver), all expense reimbursem*nts are taxable unless the 9/5/6 Rule is met. See NRA Definitions as well as Special Rules chart for details on the 9/5/6 Rule.
What are accountable plan reimbursem*nts?
As indicated inIRS Publication 463(Chapter 6):
To be an accountable plan, Emory’s reimbursem*nt or allowance arrangement must include all of the following rules:
- Your expenses must have a business connection — that is, you must have paid or incurred deductible expenses while performing services as an employee or independent contractor of Emory.
- You must adequately account to Emory for these expenses within a reasonable period of time.
- You must return any excess reimbursem*nt or allowance within a reasonable period of time.
An excess reimbursem*nt is any amount you are paid that is more than the business-related expenses that you adequately accounted for to Emory.
Reasonable period of time
The definition of reasonable period of time depends on the facts and circ*mstances of your situation. However, regardless of the facts and circ*mstances of your situation, actions that take place within the times specified in the following list could be treated as taking place within a reasonable period of time.
- You receive an advance within 30 days of the time you have an expense and submit an expense report within 10 days after the last date of travel. Any travel advances not reconciled within 120 days from the return of the trip will be treated as taxable income. (Note: advances are allowed only for Emory employees.)
- You adequately account for your expenses within 60 days after they were paid or incurred.
- You return any excess reimbursem*nt within 30 days after the date the expense report is submitted (or 120 days if Emory provides a periodic statement).
Travel Reimbursem*nt
Reimbursem*nts for expenses not considered extravagant incurred for travel (food, transportation and lodging) for employees, visitors and students. When an identifiable business purpose and benefit to Emory exists, the payment will be considered non-taxable because it meets the accountable plan definitions. This can, for example, be satisfied by participation in a conference through presenting a paper or organizing meeting sessions or assisting in a presentation or participating in collaboration with others.
Funds provided for travel may be considered taxable when there is no identifiable business purpose or benefit to Emory.
Non-accountable plan reimbursem*nts
As indicated on the IRS website:
A non-accountable plan payment is a reimbursem*nt or expense allowance that does not meet all of the three rules listed earlier underAccountable Plans. Some examples are:
- Excess reimbursem*nts you fail to return to Emory.
- Reimbursem*nt of non-deductible expenses.
- An arrangement that repays you for business expenses by reducing the amount reported as your wages, salary, or other pay. This is because you are entitled to receive the full amount of your pay whether or not you have any business expenses.
The payment may be determined to be taxable if the purpose is for thedirect benefit of the individual.Common example include travel funds paid to students for their independent study, and payments related to acquiring a VISA. In these two scenarios the rate of tax is 14 percent for F and J students and 30 percent for all others.
Related Emory policies:
- Policy 2.102 – Non-Employee and Non-Resident Alien Travel
- Policy 2.104 – Travel – Non-Reimbursable or Payable Items
What do I do if I want to reimburse an individual for a non-accountable plan expense?
The following chart summarizes the payment process and tax, depending on whether the payee is an employee, a student non-employee, or a visitor:
| Non-Student | Student | |
|---|---|---|
| How | Route the request to Payroll | Route the request to Payroll |
| Taxes | Considered W-2 wages | Considered W-2 wages |
| US | Non-US | ||||
|---|---|---|---|---|---|
| Student | Visitor | Student | Visitor | ||
| Taxes | Considered non-compensation/scholarship | Subject to Form 1099 reporting |
| 30% tax withholding | |
| Reporting | No reporting required but may be taxable to recipient | Subject to 1042-S withholding | Subject to 1042-S withholding | ||
See Paying Foreign Individuals Through Compass for instructions on how to enter the payment request in Compass for non-employees.
Common Reimbursem*nt Examples -- Student Non-Employees
Example 1:Travel expense reimbursem*nt related to attending a conference or seminar
- Accountable Planand not included in gross income if:
- The student helped organize or facilitate the event as a representative of Emory University
- The student presented a paper, lead a discussion and/or provided expertise gained at Emory, etc.
- Non-Accountableplan and included in gross income if:
- Student attended the event to enhance his/her own studies with no participation – mainly for personal benefit
Example 2
- Accountable Planand not included in gross income if:
- Expense reimbursem*nt is related to bringing students or others to campus for a job related visit.
- Non-Accountable Planand included in gross income if:
- Expense reimbursem*nt is related to bringing non-Emory students to campus for a non-job related visit.
Example 3
- Accountable Planand not included in gross income if:
- Expense reimbursem*nts for purchase of computers (or other similar items) for class use where Emory maintains ownership of the item.
- Non-accountable Planand included in gross income
- The student can keep the computer at the end of the class or session.
The chart below shows you how to calculate a gross-up under the applicable rates and how the tax withholding works:
| Visitor responsible for tax at 14% (D) | Gross-up so Department Covers the Tax Due at 14% | Visitor responsible for tax at 30% | Gross-up so Department Covers the Tax Due at 30% | |
|---|---|---|---|---|
| ||||
| Reimbursem*nt Amount (A) | $500.00 | $500.00 | $500.00 | $500.00 |
| Department gross-up amount of 16.28% of the reimbursem*nt amount (B) | 81.40 | |||
| Department gross-up amount of 42.9% of the reimbursem*nt amount (B) | 214.50 | |||
| Taxable amount of payment | 500.00 | 581.40 | 714.50 | |
| LESS: Tax withheld at 14% (C) | 70.00 | 81.40 | ||
| LESS: Tax withheld at 30% (C) | 150.00 | (214.50) | ||
| Net payment to visitor | $ 430.00 | $ 500.00 | $ 350.00 | $ 500.00 |
For reimbursem*nts where no honorarium/fee is involved, fill out theForeign National Visitor Information Form.
Note:If you are unable to fill out the Foreign National Visitor Information Form online using interactive fields, download the form using the down arrow at the top right of the form and select theOpen with Adobe Readeroption or use another web browser to access the form. The ability to use interactive fields may vary by browser. Note that the country field on the Form is a drop down box.
