Running a business through a corporation has tax perks—but only if you play by the rules. One of the most overlooked? Properly reimbursing yourself for business expenses.

At Polaris Tax & Accounting, we regularly help business owners implement IRS-compliant reimbursement plans to protect their deductions and avoid audit headaches. Here’s how to make sure your C or S corporation gets the deduction and you get reimbursed tax-free.

Your Corporation Is a Separate Legal Entity

The first thing to understand: you and your corporation are not the same person.

That means if you pay for business-related expenses—travel, meals, mileage, office supplies—your corporation can’t deduct them unless it formally reimburses you. And since the Tax Cuts and Jobs Act eliminated unreimbursed employee expenses as a deduction (through 2025), you can’t deduct them personally either.

So if you don’t get reimbursed, you lose the deduction entirely.

The IRS-Compliant Solution: Accountable Plans

To get reimbursed the right way, you need to follow an IRS-approved structure known as an accountable plan. This allows your corporation to:

  • Deduct the expense as a business cost
  • Reimburse you tax-free (no payroll taxes or W-2 reporting)

Win-win.

Requirements for a Valid Accountable Plan

The IRS says your plan must meet these three criteria:

  1. Business Connection: The expenses must have a legitimate business purpose
  2. Substantiation: You must submit records (receipts, mileage logs, etc.) within a reasonable time
  3. Return of Excess: If you’re advanced more than you spent, you must return the difference

✅ Pro Tip: While the IRS doesn’t require a formal written accountable plan, we recommend having one in writing—especially if you’re the sole shareholder. It adds credibility during an audit.

What Expenses Can You Reimburse?

Common examples include:

  • Business travel (airfare, hotel, Uber, per diem)
  • Meals with clients or for business purposes
  • Mileage on a personal vehicle used for work (at the IRS rate)
  • Continuing education and training
  • Office supplies, tech, and subscriptions

Step-by-Step Guide to Implementing an Accountable Plan

  1. Track All Expenses in Real Time
    Use an app or spreadsheet. Save receipts, track mileage, and note the business purpose.
  2. Submit Expense Reports to Your Corporation
    Create a simple reimbursement form or use accounting software to log details monthly or quarterly.
  3. Reimburse Yourself Promptly
    Cut a check or transfer the money from the business account. Keep a copy of the report and payment proof.
  4. Return Excess Advances
    If the business paid ahead (e.g., per diem or mileage advance), reconcile and return anything unspent.

What Happens If You Skip This?

If you don’t reimburse yourself:

  • The corp loses the deduction
  • You lose the money
  • The IRS could treat your reimbursements as taxable income if you don’t follow accountable plan rules

🔥 Especially for Florida-based C and S corps: improper reimbursements are one of the top audit triggers we see.

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Let Polaris Help You Set It Up

If you’re paying out-of-pocket for business expenses, you’re giving money away unless you’re reimbursing yourself correctly. Let’s fix that.

📍 Based in Plantation, FL, Polaris helps C and S corp owners nationwide implement accountable plans and maximize deductions.

👉 Schedule a consultation today and we’ll review your structure, reimbursements, and deductions together.