Richard is a sales person for Publix Company. Every month Richard fills out an expense account report, documenting all his expenses and submits it for reimbursement. During the current year, Richard submitted documentation and receives $12,500 of reimbursements. All his claims are reimbursed. How will these expenses and reimbursements affect Richard's income tax calculation?
i.Expense amounts are deductible from AGI.II.Reimbursed amounts are excluded from gross income.

Question

Richard is a sales person for Publix Company. Every month Richard fills out an expense account report, documenting all his expenses and submits it for reimbursement. During the current year, Richard submitted documentation and receives $12,500 of reimbursements. All his claims are reimbursed. How will these expenses and reimbursements affect Richard's income tax calculation?
i.Expense amounts are deductible from AGI.II.Reimbursed amounts are excluded from gross income.
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Quizplus · Accepted Answer

Reimbursed expenses for business purposes are not included in an employee's gross income, making statement II correct. Statement I is incorrect in this context because the expenses reimbursed by the employer do not affect the employee's AGI (Adjusted Gross Income) since they are not deducted from the employee's income; they are simply not reported as income.

Richard Is a Sales Person for Publix Company