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What are Employee Expenses?

By Lily Ruha
Updated May 16, 2024
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Employee expenses are costs associated with tasks performed for an employer. Employers generally designate a list of allowable expenses for which they are willing to reimburse employees. Such a list might include expenses related to business travel, meals, lodging, phone calls, Internet and office supplies. Some employers issue company credit cards for such expenses, while others expect employees to cover the costs and request reimbursement.

Allowable employee expenses generally vary from employer to employer. Most companies and organizations have a clearly defined list of allowable expenses. One company might cover an employee’s cell phone bill if the majority of his calls are business related. Another company might disallow cell phone costs, requiring that employees make all business calls from the company office.

The types of employee expenses commonly covered by businesses are related to business travel, business meals and office supplies. Legitimate expenses might include airfare for a national business meeting, a restaurant bill for meeting with a potential client or a printer cartridge needed to print manuals for company training. In all cases, the expense must be reasonable and associated with advancing the goals of the job and the company.

Employees who work from home might have additional employee expenses. When employees telecommute, employers save costs on office space and utilities. In these cases, employers often make allowances for additional expenses. Examples of telecommuting expenses might include Internet costs, computer and printer-related expenses and phone bills. Employers might require that employees limit the utilization of these services and items to business use only.

Employers usually expect employees to track their own employee expenses outside of the company environment. They generally provide expense forms that need to be filled out and submitted according to a set payment schedule. In most cases, original receipts must be submitted along with the expense forms to provide backup documentation for costs incurred. Reimbursement of employee expenses is not taxable and is usually paid separately from employee payroll checks.

In some cases, filling out the employee expense form will require extensive detail and attention. In the case of expenses split between business and personal use, some employers require an exact accounting. An employee might rent a car while on a business trip, for example, and drive the car for business use for a week and spend an extra few days using the car strictly for visiting family. He might be required to subtract the personal days from the car rental bill when submitting it for reimbursement.

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