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moving advance

edited November 2010 in General Payroll Topics
good morning!
we are relocating a lot of employees, and we are trying to come up with a policy that works across the board.
Under an accountable plan (according to the IRS) you can advance money to an employee and then have them submit receipts after the move to record deductible and non-deductible expenses.
We have to do it this way because we have a lot of employees who cannot afford to pay up front and then be reimbursed.
My question is with my payroll system, how can I give them a check for the advance without having it hit their wages so that I do not have to go through the hassel of reversing and reentering checks once the receipts come in. I want to be able to just look at the amount we gave them, determine what it taxable and what isn't and add that to their W2?
Can I possibly do a Negative Deduction so they get a net check?


  • Or -
    Give the employees an advance - have them make the payments - and timely submit an expense report and refund any portion of the advance that is not for qualified expenses. Any portion of the advance that is retained by the employee beyond the "reasonable time" that is not substantiated or not refunded becomes wages. General guidelines (safe harbors) are to give the advance not more than 30 days prior to expenditure, expenses should be substantiated within 60 days and any excess returned within 120 days. If not timely substantiated or returned, the unsubstantiated amounts are treated as paid under a non-accountable plan, are subject to withholding, and are included in the W-2.
  • great that is exactly what we will do!