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Payroll Services Mailbag: Valid W-4, parking stipends and more

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Alice Gilman

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in Centerpiece,Office Management,Payroll Management

Editor of Business Management Daily's Payroll Legal Alert, and employment tax compliance expert Alice Gilman answers your payroll questions in this roundup of Payroll Services Mailbag.

Are expenses paid directly to third parties still taxable?

Question: The company has an account with a car service. The car service bills us directly, so employees aren’t reimbursed. Are these amounts still taxable to employees, even though they never receive cash?

Answer: Maybe. Employees must still satisfy the accountable plan rules in order for any payment made on their behalf to be excluded from their income. Paying the car service’s bills essentially functions as an advance to employees. They still need to substantiate the time, place and business purpose of their use of a car. In other words, you know when the expense was incurred, where it was incurred and how much. But you don’t know why the expense was incurred and that’s ...(register to read more)

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