Employee reimbursement of doctor visit overseas - taxable?

[swalsh411]

What is the name of your state (only U.S. law)? Federal

Employee was on company travel in Mexico (probably doesn't matter that it was overseas) and twisted her ankle. Went to local hospital for treatment. Insurance covered all but about $100 of the bill. We want to reimburse this employee for her co-pay. I'm 99% sure this is taxable to the employee but wanted to see if anybody disagreed. I am not aware of anything in the IRS code that would allow this to be excluded from income.

 

[Antigone*]

What is the name of your state (only U.S. law)? Federal

Employee was on company travel in Mexico (probably doesn't matter that it was overseas) and twisted her ankle. Went to local hospital for treatment. Insurance covered all but about $100 of the bill. We want to reimburse this employee for her co-pay. I'm 99% sure this is taxable to the employee but wanted to see if anybody disagreed. I am not aware of anything in the IRS code that would allow this to be excluded from income.

Why would reimbursement of an out-of-pocket be taxable for her, if it is going to be tax-deductible for you? Wouldn't it be handled just like meals or other travel expenses?

 

[LdiJ]

What is the name of your state (only U.S. law)? Federal

Employee was on company travel in Mexico (probably doesn't matter that it was overseas) and twisted her ankle. Went to local hospital for treatment. Insurance covered all but about $100 of the bill. We want to reimburse this employee for her co-pay. I'm 99% sure this is taxable to the employee but wanted to see if anybody disagreed. I am not aware of anything in the IRS code that would allow this to be excluded from income.

I am not aware of anything in the code that would require you to include it IN income either. You are reimbursing the employee for expenses incurred while upon a business trip. As long as the reimbursements are on an accountable plan (she has to provide documentation of her expenses) then there is no reason why the expenses should be included in income.

Personally, I would have turned the whole thing into worker's comp, but its probably too late for that now.

 

[swalsh411]

Anything of value given to an employee that is derived from the employer/employee relationship is taxable unless there is a specific exclusion in the code. No exclusion, then it's taxable.

An accountable plan doesn't mean ANYTHING can be excluded from income; it still has to fall into one of the acctable categories. For example, you could not exclude reimbursement for a manicure at a luxury spa or an employee's gambling losses.

 

[LdiJ]

Anything of value given to an employee that is derived from the employer/employee relationship is taxable unless there is a specific exclusion in the code. No exclusion, then it's taxable.

An accountable plan doesn't mean ANYTHING can be excluded from income; it still has to fall into one of the acctable categories. For example, you could not exclude reimbursement for a manicure at a luxury spa or an employee's gambling losses.

The whole essence of an accountable plan is that the expenses have to be appropriate and justifiable (therefore excludable). Most certainly medical bills while injured on the job are justifiable and excludable.

The employer would never reimburse the employee for a manicure at a luxury spa or employee gambling losses that were merely for the employee's benefit...so that is pretty much a moot point.

However...if the employee was entertaining an important customer who wanted to gamble, some small gambling losses might very well be reimbursed and excludable...and if entertaining an important customer might include some services at a spa, again, they might very well be reimbursed and excludable.

 

[eerelations]

Ummmmm, unless you're in Hawaii, Mexico isn't actually "overseas"...

 

[davew128]

Ummmmm, unless you're in Hawaii, Mexico isn't actually "overseas"...

Depends on where you were in the US when travelling to Mexico. For me, it's a short drive and maybe a park and ride. If I were in the eastern US and took a flight, that flight would be....overseas.