The accountable plan: thousands back, completely tax-free

The S-Corp move almost nobody uses

You pay for business costs personally all the time — Saturday fuel fill-ups, work boots, the phone that runs the crew, the home office where you schedule. An accountable plan is a short written agreement that lets your S-Corp pay you back for those costs: a deduction for the company, and completely tax-free money to you — no income tax, no payroll tax.

Compare the alternative

Cover those costs with extra salary instead and payroll taxes hit both sides plus income tax on top — you can lose 30–40 cents on the dollar. The accountable plan erases that.

What it takes (the IRS’s three asks)

• A genuine business expense — ordinary and necessary for the work
• Proof — receipts, and a mileage log with date, miles, and purpose
• Timeliness — expenses accounted for within about 60 days; advances squared up within about 120

What it’s worth

A realistic year — 8,000 business miles, the business share of your phone, safety gear, a home office — can add up to roughly $9,000 of reimbursements. At a 25% combined rate, that’s about $2,250 kept, on money you were spending anyway.

Fine print: this is for S-Corps (and C-Corps). Sole props and default-taxed LLCs can’t reimburse themselves — you and the business are legally the same person. (If your profit tops $30–40K, that’s one more reason the S-Corp conversation is worth having — start with the calculator.) And skip the paperwork and reimbursements can be reclassified as taxable wages — so keep the records.

Watch the full breakdown

Prefer video? Everything in this article, straight from Taucier — and there’s more on our YouTube channel.

Questions about how this applies to your business? Book a free discovery call — thirty minutes, no cost, no jargon. Or head back to all free resources.