Author Topic: Expense reimbursements through work or tax write-offs?  (Read 1761 times)

jeromedawg

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Expense reimbursements through work or tax write-offs?
« on: January 12, 2016, 01:39:23 PM »
Hey guys,

Just wondering if there's much benefit in deducting office expenses from your taxes or if it's better just to get expenses reimbursed from work. I guess maybe it's more preferable to just write them off on your taxes to help towards lowering taxes due (if you're expecting to owe)?

MDM

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Re: Expense reimbursements through work or tax write-offs?
« Reply #1 on: January 12, 2016, 02:05:19 PM »
Let's say you spend $200 and are in the 25% tax bracket.  Even if you could deduct the full $200 (there may be an AGI-based minimum before you can deduct anything), you would get only $50 from the IRS.  Better to get $200 tax-free (because it is a reimbursement, not a payment) from your employer.

ooeei

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Re: Expense reimbursements through work or tax write-offs?
« Reply #2 on: January 12, 2016, 02:06:28 PM »
Someone will hopefully correct me if I'm wrong, but Im pretty sure reimbursement is the way to go.

When you deduct expenses on your taxes, the value of the deduction is used to reduce your taxable income, not to directly reduce your taxes.  Basically, if you have $1000 worth of deductions and currently are taxed on $50k of income, you would instead be taxed on $49k of income.  Since that has you at the 25% tax bracket, you effectively save $250 on your taxes compared to not having the deduction.  You spent $1000 on work stuff, and saved $250 on taxes, netting you -$750.  If you're reimbursed from work they pay you the $1000 and you end up with $0.  Since $0 is more than -$750, go with the reimbursement.


Capsu78

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Re: Expense reimbursements through work or tax write-offs?
« Reply #3 on: January 12, 2016, 02:34:42 PM »
20 year consultant here:  No brainer for reimbursements.   Once they cut the check, you have full recovery of your accepted expense items..  And, you don't have the IRS coming back 3 years later asking you to "prove out" some portion of your business expenses which is a miserable 5 month back and forth even for a rect. packrat like me!...I know because I have done it twice.

jeromedawg

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Re: Expense reimbursements through work or tax write-offs?
« Reply #4 on: January 20, 2016, 07:15:58 PM »
Hey guys, just a side question here but internet is one of the things I can expense.

Currently I'm on one of the lower tiers of internet and I'm thinking to bump up to a higher tier. The highest tier (300mbps down/30up) my provider offers costs $99.99. I was trying to find out what the cap is for my work but nobody seems sure or wants to definitively say for whatever reason... although my manager did say that "around $80 is well within the range" with some probing. Do you guys think I should just bump it to the $99.99 plan and see what happens when I file an expense report? I mean, the worse they could do is say "sorry but we could only reimburse X amount out of your costs" if they don't go that high. On the other hand, I don't know if that plan is way excessive or not (I'm full-time telecommute)... the second highest tier ($78.99) is 100mbps down/10 up I believe.

MDM

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Re: Expense reimbursements through work or tax write-offs?
« Reply #5 on: January 20, 2016, 07:31:47 PM »
...nobody seems sure or wants to definitively say for whatever reason...
Much should depend on the nature of your work.  In most cases, there is not a strong correlation between the value you provide to the company and the speed of your internet connection.  YMMV.

ooeei

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Re: Expense reimbursements through work or tax write-offs?
« Reply #6 on: January 21, 2016, 06:02:08 AM »
If $80 is within the range, get the $80 one. What advantage is there to having 300 rather than 100?  Unless you're regularly downloading huge files I don't think you'll notice a change.