S Corporations benefit from implementing an Accountable Plan because reimbursements made under this plan are not treated as taxable wages. Since reimbursements are non-taxable, S Corporations benefit from Accountable Plans by reimbursing themselves for business-related expenses paid out of pocket. For example, as an S Corporation owner, your therapy practice is no longer eligible for the Home Office Deduction, but home office expenses can still be reimbursed through an Accountable Plan.
How to Issue Reimbursements in Heard Payroll
One-time reimbursements are preferred by therapists who prefer a single lump sum or who haven't made any reimbursements during the year. You can set up reimbursements for employees and contractors through Heard Payroll. As a reminder:
- Reimbursements are not taxed and, therefore, not reported as regular wages.
- Reimbursements are reflected on both appear on regular and off-cycle payrolls.
One-time reimbursements for employees
- Navigate to Payroll > Run Payroll.
- Click Run Payroll.
- Next to your employee, click +Reimbursement.
- Reimbursements must be a positive amount.
- Enter the dollar amount you'd like to reimburse.
- Click Save & Continue.
- Finish running payroll.
One-time reimbursements for contractors
- Navigate to Payroll > Run Payroll.
- Click Pay Contractors.
- Select your contactor and click Continue.
- Next to your contractor, click +Reimbursement.
- Reimbursements must be a positive amount.
- Enter the dollar amount you'd like to reimburse.
- Click Save & Continue.
- Finish running payroll.
Once payroll has been processed, these amounts will be listed as a separate line item on your employee's or contractor's pay stub.
If you have AutoPilot activated for your payroll, you’ll need to run payroll manually to add a one-time reimbursement and follow the instructions below.
There are some reimbursements that are currently not supported in Heard Payroll:
- Reimbursement memos or descriptions
- Recurring reimbursements
- Bulk reimbursement actions