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Even if your not-for-profit organization rarely needs to reimburse staffers, board members or volunteers, reimbursement requests almost certainly will occasionally appear. At that point, will you know how to pay stakeholders back for expenses related to your nonprofit\u2019s operations? If you have a formal reimbursement policy, you will. Plus, you\u2019ll be able to direct individuals with reimbursement questions to your formal document and minimize the risk of disagreements.<\/p>\n
2 categories<\/strong><\/p>\n In the eyes of the IRS, expense reimbursement plans generally fall into two main categories:<\/p>\n 1. Accountable plans.<\/strong> Reimbursements under these plans generally aren\u2019t taxable income for the employee, board member or volunteer. To secure this favorable tax treatment, accountable plans must satisfy three requirements: 1)\u00a0Expenses must have a connection to your organization\u2019s purpose; 2)\u00a0claimants must adequately substantiate expenses within 60\u00a0days after they were paid or incurred; and 3)\u00a0claimants must return any excess reimbursement or allowance within 120\u00a0days after expenses were paid or incurred.<\/p>\n Arrangements where you advance money to an employee or volunteer meet the third requirement only if the advance is reasonably calculated not to exceed the amount of anticipated expenses. You must make the advance within 30\u00a0days of the time the recipient pays or incurs the expense.<\/p>\n 2. Nonaccountable plans.<\/strong> These don\u2019t fulfill the above requirements. Reimbursements made under nonaccountable plans are treated as taxable wages.<\/p>\n Policy items<\/strong><\/p>\n Your reimbursement policy should make it clear which types of expenses are reimbursable and which aren\u2019t. Be sure to include any restrictions. For example, you might set a limit on the nightly cost for lodging or exclude alcoholic beverages from reimbursable meals.<\/p>\n Also be sure to require substantiation of travel, mileage and other reimbursable expenses within 60\u00a0days. The documentation should include items such as a statement of expenses, receipts (showing the date, vendor, and items or services purchased), and account book or calendar. Note that the IRS does allow some limited exceptions to its documentation requirements. Specifically, no receipts are necessary\u00a0for:<\/p>\n Your policy should require the timely (within 120\u00a0days) return of any amounts you pay that are more than the substantiated expenses.<\/p>\n Standard rate vs. actual costs<\/strong><\/p>\n Finally, address mileage reimbursement, including the method you\u2019ll use. You can reimburse employees for vehicle use at the federal standard mileage rate of 67\u00a0cents per mile for 2024, and volunteers at the charity rate of 14\u00a0cents per mile. Unlike employees, however, volunteers can be reimbursed for commuting mileage.<\/p>\n Alternatively, you can reimburse employees and volunteers for the actual costs of using their vehicles for your nonprofit\u2019s purposes. For employees, you might reimburse gas, lease payments or depreciation, repairs, insurance, and registration fees. For volunteers, the only allowable actual expenses are gas and\u00a0oil.<\/p>\n What makes sense<\/strong><\/p>\n You don\u2019t need to craft a reimbursement policy on your own. We can help ensure you include the elements that make sense given your nonprofit\u2019s size, mission and activities and update it as your organization grows and\u00a0evolves.<\/p>\n \u00a9 2024<\/em><\/p>\n <\/body> Even if your not-for-profit organization rarely needs to reimburse staffers, board members or volunteers, reimbursement requests almost certainly will occasionally appear. At that point, will you know how to pay stakeholders back for expenses related to your nonprofit\u2019s operations? If you have a formal reimbursement policy, you will. Plus, you\u2019ll be able to direct individuals […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,10,15],"tags":[8,11,12],"class_list":["post-16862","post","type-post","status-publish","format-standard","hentry","category-articles","category-news","category-not-for-profit","tag-articles","tag-news","tag-updates"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16862","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=16862"}],"version-history":[{"count":1,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16862\/revisions"}],"predecessor-version":[{"id":16863,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16862\/revisions\/16863"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=16862"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=16862"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=16862"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
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