Menu

Job Interview expense-reimbursement taxable?

Home Tax Reduction Job Interview expense-reimbursement taxable?

  • jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7948
    Joined: 01/09/2016

    Is reimbursement taxable differently or as ordinary income?

    Click to expand…

    No.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #220167 Reply
    Avatar Brains428 
    Participant
    Status: Physician
    Posts: 350
    Joined: 11/09/2017

    How does the employer (not yours specifically) view the expense. I’m assuming any hiring process is considered a business expense that they report to the IRS from their end.

    Where i’m employed, they bought plane tickets, booked rental car and hotel, and set up the second site visit after I signed the contract (HR, housing stuff). Essentially, no money ever directly passed through me.

    The other interviews I took I drove to. More traditional private practice gigs in region. They paid for all my lodging and food. Again, I never had to submit any receipts for that.

    I know my comments aren’t necessarily helpful, but I was unaware you could receive any tax consequence from it. Probably just dazzled by attending pay…

    #220172 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7948
    Joined: 01/09/2016

    How does the employer (not yours specifically) view the expense. I’m assuming any hiring process is considered a business expense that they report to the IRS from their end.

    Where i’m employed, they bought plane tickets, booked rental car and hotel, and set up the second site visit after I signed the contract (HR, housing stuff). Essentially, no money ever directly passed through me.

    The other interviews I took I drove to. More traditional private practice gigs in region. They paid for all my lodging and food. Again, I never had to submit any receipts for that.

    I know my comments aren’t necessarily helpful, but I was unaware you could receive any tax consequence from it. Probably just dazzled by attending pay…

    Click to expand…

    I don’t think you’re asking me that question, but I may be able to provide a little clarification. Employer business expenses and job hunting expenses and moving expenses were deductible before TCJA 2017. Employers typically provided these perks without tax consequence until tax year 2018.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]t.com

    #220173 Reply
    Liked by Brains428
    Avatar Chessknt 
    Participant
    Status: Resident, Physician
    Posts: 7
    Joined: 04/16/2018

    How does the employer (not yours specifically) view the expense. I’m assuming any hiring process is considered a business expense that they report to the IRS from their end.

    Where i’m employed, they bought plane tickets, booked rental car and hotel, and set up the second site visit after I signed the contract (HR, housing stuff). Essentially, no money ever directly passed through me.

    The other interviews I took I drove to. More traditional private practice gigs in region. They paid for all my lodging and food. Again, I never had to submit any receipts for that.

    I know my comments aren’t necessarily helpful, but I was unaware you could receive any tax consequence from it. Probably just dazzled by attending pay…

    Click to expand…

    I don’t think you’re asking me that question, but I may be able to provide a little clarification. Employer business expenses and job hunting expenses and moving expenses were deductible before TCJA 2017. Employers typically provided these perks without tax consequence until tax year 2018.

    Click to expand…

    Sorry to bump this thread but I want to be sure I understand this correctly:

    Expenses I incur for travelling for a site interview that are reimbursed by the potential employer are now considered taxable income?

    So I fly out to an employer, stay 2 nights, eat food for a grand total of ~$1k and get reimbursed for this cost but end up not working with this employer. If my marginal tax rate is 22% I will get a 1099 come january for 1K from this prospective employer and owe the IRS $220?

    #227539 Reply
    Avatar Medman80 
    Participant
    Status: Resident
    Posts: 9
    Joined: 11/13/2017

    How does the employer (not yours specifically) view the expense. I’m assuming any hiring process is considered a business expense that they report to the IRS from their end.

    Where i’m employed, they bought plane tickets, booked rental car and hotel, and set up the second site visit after I signed the contract (HR, housing stuff). Essentially, no money ever directly passed through me.

    The other interviews I took I drove to. More traditional private practice gigs in region. They paid for all my lodging and food. Again, I never had to submit any receipts for that.

    I know my comments aren’t necessarily helpful, but I was unaware you could receive any tax consequence from it. Probably just dazzled by attending pay…

    Click to expand…

    I don’t think you’re asking me that question, but I may be able to provide a little clarification. Employer business expenses and job hunting expenses and moving expenses were deductible before TCJA 2017. Employers typically provided these perks without tax consequence until tax year 2018.

    Click to expand…

    Sorry to bump this thread but I want to be sure I understand this correctly:

    Expenses I incur for travelling for a site interview that are reimbursed by the potential employer are now considered taxable income?

    So I fly out to an employer, stay 2 nights, eat food for a grand total of ~$1k and get reimbursed for this cost but end up not working with this employer. If my marginal tax rate is 22% I will get a 1099 come january for 1K from this prospective employer and owe the IRS $220?

    Click to expand…

    I believe she’s saying the prospective employer will be taxed on these costs, but the employee will not?

    #228337 Reply
    Avatar Tim 
    Participant
    Status: Accountant
    Posts: 2843
    Joined: 09/18/2018
    otherwise its no different than a friend paying your airfare….

    Click to expand…

    Except your friend won’t send you a 1099!

    Taxable as ordinary income for the job hunter.

    Deductible as a business expense for the prospective employer.

    #228343 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7948
    Joined: 01/09/2016

    How does the employer (not yours specifically) view the expense. I’m assuming any hiring process is considered a business expense that they report to the IRS from their end.

    Where i’m employed, they bought plane tickets, booked rental car and hotel, and set up the second site visit after I signed the contract (HR, housing stuff). Essentially, no money ever directly passed through me.

    The other interviews I took I drove to. More traditional private practice gigs in region. They paid for all my lodging and food. Again, I never had to submit any receipts for that.

    I know my comments aren’t necessarily helpful, but I was unaware you could receive any tax consequence from it. Probably just dazzled by attending pay…

    Click to expand…

    I don’t think you’re asking me that question, but I may be able to provide a little clarification. Employer business expenses and job hunting expenses and moving expenses were deductible before TCJA 2017. Employers typically provided these perks without tax consequence until tax year 2018.

    Click to expand…

    Sorry to bump this thread but I want to be sure I understand this correctly:

    Expenses I incur for travelling for a site interview that are reimbursed by the potential employer are now considered taxable income?

    So I fly out to an employer, stay 2 nights, eat food for a grand total of ~$1k and get reimbursed for this cost but end up not working with this employer. If my marginal tax rate is 22% I will get a 1099 come january for 1K from this prospective employer and owe the IRS $220?

    Click to expand…

    Sorry, I now see I was not very clear when I was originally answering this question. In fact, my answer was downright confusing.

    Employee business expenses, moving expenses, and job-hunting expenses were deductible until 2018. Employee business expenses and job-hunting expenses were deductible as an itemized deduction, subject to 2% AGI haircut; job-hunting expenses were deductible as an “above-the-line” deduction. Because of this, employers could provide these perks on the employee’s behalf and the job-hunter’s behalf and the employee/prospective employee could exclude from taxes.

    Employees/job hunters can no longer deduct these expenses, so employers (including prospective employers) are no longer permitted to provide them as tax-free perks. The employer can still take the deduction as an ordinary and necessary business expense but the employee/job hunter is taxed on the benefit.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #228368 Reply
    Avatar Chessknt 
    Participant
    Status: Resident, Physician
    Posts: 7
    Joined: 04/16/2018

    So is the tax bill outcome in my hypothetical outcome correct? Based on your post you seem to be implying that job hunters are taxed on benefits paid for by prospective employers.

    #228413 Reply
    Avatar AR 
    Participant
    Status: Physician
    Posts: 824
    Joined: 03/10/2016

    Sorry, I now see I was not very clear when I was originally answering this question. In fact, my answer was downright confusing. Employee business expenses, moving expenses, and job-hunting expenses were deductible until 2018. Employee business expenses and job-hunting expenses were deductible as an itemized deduction, subject to 2% AGI haircut; job-hunting expenses were deductible as an “above-the-line” deduction. Because of this, employers could provide these perks on the employee’s behalf and the job-hunter’s behalf and the employee/prospective employee could exclude from taxes. Employees/job hunters can no longer deduct these expenses, so employers (including prospective employers) are no longer permitted to provide them as tax-free perks. The employer can still take the deduction as an ordinary and necessary business expense but the employee/job hunter is taxed on the benefit.

    Click to expand…

    OK, Company A has an open position and Dr. X applies.  They talk and then they invite Dr X for an in person interview.  They fly Dr. X out and pay for accommodations.  Total cost of this is $1000.

    In the end, Dr. X decides to work elsewhere.

    So you’re saying that Company A needs to send Dr. X a 1099 for $1000.

    Is that correct?  If so, has anyone ever received a 1099 in this scenario or know of someone who has?

    #228433 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7948
    Joined: 01/09/2016
    medical school scholarship sponsor
    OK, Company A has an open position and Dr. X applies.  They talk and then they invite Dr X for an in person interview.  They fly Dr. X out and pay for accommodations.  Total cost of this is $1000. In the end, Dr. X decides to work elsewhere. So you’re saying that Company A needs to send Dr. X a 1099 for $1000. Is that correct?  If so, has anyone ever received a 1099 in this scenario?

    Click to expand…

    Please don’t shoot the messenger, but that’s correct. Whether Company A will send the 1099 or not may be a different matter, and whether Dr. X chooses to report that income without a 1099 is up to Dr. X, but we have already experienced this with clients. Regardless, the $1k is taxable to Dr. X. As to how Dr. X will know what Co. A spent on her without a 1099, I don’t think that is something Congress considered.

    2018 was only the 1st year of this being in effect and it usually takes awhile for compliance within affected businesses to catch up. But I expect to see more and more 1099’s or find the income included on W2’s should the prospect become an employee.

    This is an area I really hope they relax the rules on.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #228435 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7948
    Joined: 01/09/2016

    So is the tax bill outcome in my hypothetical outcome correct? Based on your post you seem to be implying that job hunters are taxed on benefits paid for by prospective employers.

    Click to expand…

    Yes, you calculated correctly, but I would substitute “may” for “will”. You would not owe SE tax on it, but you would owe state tax, if applicable.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #228436 Reply
    Avatar AR 
    Participant
    Status: Physician
    Posts: 824
    Joined: 03/10/2016
    OK, Company A has an open position and Dr. X applies.  They talk and then they invite Dr X for an in person interview.  They fly Dr. X out and pay for accommodations.  Total cost of this is $1000. In the end, Dr. X decides to work elsewhere. So you’re saying that Company A needs to send Dr. X a 1099 for $1000. Is that correct?  If so, has anyone ever received a 1099 in this scenario? 

    Click to expand…

    Please don’t shoot the messenger, but that’s correct. Whether Company A will send the 1099 or not may be a different matter, and whether Dr. X chooses to report that income without a 1099 is up to Dr. X, but we have already experienced this with clients. Regardless, the $1k is taxable to Dr. X. As to how Dr. X will know what Co. A spent on her without a 1099, I don’t think that is something Congress considered.

    2018 was only the 1st year of this being in effect and it usually takes awhile for compliance within affected businesses to catch up. But I expect to see more and more 1099’s or find the income included on W2’s should the prospect become an employee.

    This is an area I really hope they relax the rules on.

    Click to expand…

    I believe you, but I guess I still don’t get why this type of expense is different from any other business expense where the company sends an employee somewhere.    Take the following example.

    X work as a W2 employee for Company A in Chicago.  X needs to attend some meetings in person at the New York office.  Company A flies X from Chicago to New York and back.  I assume here the cost of the flight is not reportable income for X.  Is that correct?

    Now imagine Y lives in Chicago and applies for a job with company A.  Y meets with people in the Chicago office.  That goes well and they say that Y needs to go for a second round of interviews in the New York office.  Company A flies Y from Chicago to New York and back.   Company A then hires Y who proceeds to work for them in Chicago.  In this scenario, you’re saying that the flight is definitely reportable income that could appear on a W2.   Is that correct?

     

    #228483 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7948
    Joined: 01/09/2016
    OK, Company A has an open position and Dr. X applies.  They talk and then they invite Dr X for an in person interview.  They fly Dr. X out and pay for accommodations.  Total cost of this is $1000. In the end, Dr. X decides to work elsewhere. So you’re saying that Company A needs to send Dr. X a 1099 for $1000. Is that correct?  If so, has anyone ever received a 1099 in this scenario?

    Click to expand…

    Please don’t shoot the messenger, but that’s correct. Whether Company A will send the 1099 or not may be a different matter, and whether Dr. X chooses to report that income without a 1099 is up to Dr. X, but we have already experienced this with clients. Regardless, the $1k is taxable to Dr. X. As to how Dr. X will know what Co. A spent on her without a 1099, I don’t think that is something Congress considered.

    2018 was only the 1st year of this being in effect and it usually takes awhile for compliance within affected businesses to catch up. But I expect to see more and more 1099’s or find the income included on W2’s should the prospect become an employee.

    This is an area I really hope they relax the rules on.

    Click to expand…

    I believe you, but I guess I still don’t get why this type of expense is different from any other business expense where the company sends an employee somewhere.    Take the following example.

    X work as a W2 employee for Company A in Chicago.  X needs to attend some meetings in person at the New York office.  Company A flies X from Chicago to New York and back.  I assume here the cost of the flight is not reportable income for X.  Is that correct?

    Now imagine Y lives in Chicago and applies for a job with company A.  Y meets with people in the Chicago office.  That goes well and they say that Y needs to go for a second round of interviews in the New York office.  Company A flies Y from Chicago to New York and back.   Company A then hires Y who proceeds to work for them in Chicago.  In this scenario, you’re saying that the flight is definitely reportable income that could appear on a W2.   Is that correct?

    Click to expand…

    With all due respect – and I mean that sincerely as I know you’re a lot sharper than I am – I don’t understand why this is so difficult to understand.

    • In your first example, the company is paying expenses for an employee. It is considered an ordinary and necessary cost of doing business.
    • In your 2nd example, the company is paying expenses for a non-employee who is job hunting. Job-hunting expenses are no longer deductible. This is considered a job-hunting expense and it is taxable compensation – no matter who pays for the flight.

    It is no different than a company paying for a moving truck to move the doctor after the doctor becomes an employee. Moving expenses are no longer deductible. If the company pays the expenses on behalf of the employee they are taxable whether the company gives the employee a check or writes the check to the moving company.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #228509 Reply
    Avatar AR 
    Participant
    Status: Physician
    Posts: 824
    Joined: 03/10/2016

    OK, Company A has an open position and Dr. X applies.  They talk and then they invite Dr X for an in person interview.  They fly Dr. X out and pay for accommodations.  Total cost of this is $1000. In the end, Dr. X decides to work elsewhere. So you’re saying that Company A needs to send Dr. X a 1099 for $1000. Is that correct?  If so, has anyone ever received a 1099 in this scenario?

    Click to expand…

    Please don’t shoot the messenger, but that’s correct. Whether Company A will send the 1099 or not may be a different matter, and whether Dr. X chooses to report that income without a 1099 is up to Dr. X, but we have already experienced this with clients. Regardless, the $1k is taxable to Dr. X. As to how Dr. X will know what Co. A spent on her without a 1099, I don’t think that is something Congress considered.

    2018 was only the 1st year of this being in effect and it usually takes awhile for compliance within affected businesses to catch up. But I expect to see more and more 1099’s or find the income included on W2’s should the prospect become an employee.

    This is an area I really hope they relax the rules on.

    Click to expand…

    I believe you, but I guess I still don’t get why this type of expense is different from any other business expense where the company sends an employee somewhere.    Take the following example.

    X work as a W2 employee for Company A in Chicago.  X needs to attend some meetings in person at the New York office.  Company A flies X from Chicago to New York and back.  I assume here the cost of the flight is not reportable income for X.  Is that correct?

    Now imagine Y lives in Chicago and applies for a job with company A.  Y meets with people in the Chicago office.  That goes well and they say that Y needs to go for a second round of interviews in the New York office.  Company A flies Y from Chicago to New York and back.   Company A then hires Y who proceeds to work for them in Chicago.  In this scenario, you’re saying that the flight is definitely reportable income that could appear on a W2.   Is that correct?

    Click to expand…

    With all due respect – and I mean that sincerely as I know you’re a lot sharper than I am – I don’t understand why this is so difficult to understand.

    • In your first example, the company is paying expenses for an employee. It is considered an ordinary and necessary cost of doing business.
    • In your 2nd example, the company is paying expenses for a non-employee who is job hunting. Job-hunting expenses are no longer deductible. This is considered a job-hunting expense and it is taxable compensation – no matter who pays for the flight.

    It is no different than a company paying for a moving truck to move the doctor after the doctor becomes an employee. Moving expenses are no longer deductible. If the company pays the expenses on behalf of the employee they are taxable whether the company gives the employee a check or writes the check to the moving company.

    Click to expand…

    Yes, I get all that but in the second example if the expenses are for a non-employee, then how can they appear as income on a W2.  W2’s by definition are employee income.  So, that should be impossible, right?

    #228548 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7948
    Joined: 01/09/2016

    OK, Company A has an open position and Dr. X applies.  They talk and then they invite Dr X for an in person interview.  They fly Dr. X out and pay for accommodations.  Total cost of this is $1000. In the end, Dr. X decides to work elsewhere. So you’re saying that Company A needs to send Dr. X a 1099 for $1000. Is that correct?  If so, has anyone ever received a 1099 in this scenario?

    Click to expand…

    Please don’t shoot the messenger, but that’s correct. Whether Company A will send the 1099 or not may be a different matter, and whether Dr. X chooses to report that income without a 1099 is up to Dr. X, but we have already experienced this with clients. Regardless, the $1k is taxable to Dr. X. As to how Dr. X will know what Co. A spent on her without a 1099, I don’t think that is something Congress considered.

    2018 was only the 1st year of this being in effect and it usually takes awhile for compliance within affected businesses to catch up. But I expect to see more and more 1099’s or find the income included on W2’s should the prospect become an employee.

    This is an area I really hope they relax the rules on.

    Click to expand…

    I believe you, but I guess I still don’t get why this type of expense is different from any other business expense where the company sends an employee somewhere.    Take the following example.

    X work as a W2 employee for Company A in Chicago.  X needs to attend some meetings in person at the New York office.  Company A flies X from Chicago to New York and back.  I assume here the cost of the flight is not reportable income for X.  Is that correct?

    Now imagine Y lives in Chicago and applies for a job with company A.  Y meets with people in the Chicago office.  That goes well and they say that Y needs to go for a second round of interviews in the New York office.  Company A flies Y from Chicago to New York and back.   Company A then hires Y who proceeds to work for them in Chicago.  In this scenario, you’re saying that the flight is definitely reportable income that could appear on a W2.   Is that correct?

    Click to expand…

    With all due respect – and I mean that sincerely as I know you’re a lot sharper than I am – I don’t understand why this is so difficult to understand.

    • In your first example, the company is paying expenses for an employee. It is considered an ordinary and necessary cost of doing business.
    • In your 2nd example, the company is paying expenses for a non-employee who is job hunting. Job-hunting expenses are no longer deductible. This is considered a job-hunting expense and it is taxable compensation – no matter who pays for the flight.

    It is no different than a company paying for a moving truck to move the doctor after the doctor becomes an employee. Moving expenses are no longer deductible. If the company pays the expenses on behalf of the employee they are taxable whether the company gives the employee a check or writes the check to the moving company.

    Click to expand…

    Yes, I get all that but in the second example if the expenses are for a non-employee, then how can they appear as income on a W2.  W2’s by definition are employee income.  So, that should be impossible, right?

    Click to expand…

    Not impossible at all if the prospective employee is hired.

    This is all theoretical and assuming the exact fact pattern and employer compliance. But, of course, if the prospective employee is hired, the employer’s tax/payroll preparer could choose to include the reimbursement on the initial W2 if they occur in the same year.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #228552 Reply

Reply To: Job Interview expense-reimbursement taxable?

In case of a glitch or error, please save your text elsewhere, clear browser cache, close browser, open browser and refresh the page.

Notifications Mark all as read  |  Clear