What is an IRS accountable plan?
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An accountable plan is a reimbursement arrangement where employees must: (1) have a business connection for the expense, (2) adequately substantiate expenses within a reasonable period, and (3) return any excess advances within 120 days. Under an accountable plan, reimbursements are not included in the employee's wages and are fully deductible by the employer. Source: IRS Reg. § 1.62-2.
What are the 2026 per diem rates?
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For FY2026, the GSA standard per diem is $110/day for lodging and $68/day for meals and incidentals (M&IE) for most U.S. locations. High-cost areas have higher rates. The M&IE breakdown is $17 breakfast, $20 lunch, $23 dinner, $8 incidentals. On travel days, 75% applies ($51). Cities with higher rates include NYC ($239 lodging), San Francisco ($198), Washington DC ($183). Visit gsa.gov/perdiem for the full table.
What is the 2026 IRS mileage reimbursement rate?
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The 2026 IRS standard mileage rate for business use of a personal vehicle is 70 cents per mile. You can reimburse employees at any rate up to 70¢/mile tax-free. Amounts above this rate are treated as wages. Employees must maintain a mileage log with date, destination, business purpose, and miles driven. Source: IRS Rev. Proc. 2025-38.
When are receipts required for business expenses?
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The IRS requires receipts for business expenses of $75 or more. For amounts under $75, you still need adequate records documenting the amount, date, place, business purpose, and business relationship of attendees. For meals, you must show who attended and the business purpose. Lodging always requires a receipt regardless of amount. Source: IRS Publication 463.
Are business meals 100% deductible in 2026?
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No. Business meals are 50% deductible in 2026 for the employer (the temporary 100% restaurant meal deduction from 2021–2022 has expired). The 50% limit applies to meals with clients, prospects, and employees where there's a business purpose. Office snacks and employee meals may qualify for 50% or 100% deduction depending on the circumstances. Entertainment expenses (concerts, sporting events) are not deductible. Source: IRC § 274.
Do I need an expense policy if I'm a sole proprietor?
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Sole proprietors don't reimburse themselves — they deduct business expenses directly on Schedule C. However, if you have employees or contractors, a written expense policy protects you from overclaiming, provides audit documentation, and helps employees understand what's reimbursable. For solo operators, a simple expense tracking system and mileage log may suffice instead of a formal policy.