Every month, you pay for your cell phone. Your internet. Your home office. Gas to meet clients. And every month, that money vanishes.
Gone from your pocket, with nothing to show for it on your tax return except maybe a complicated deduction that gets you pennies on the dollar.
What if I told you there’s a legal mechanism sitting inside the IRS code that lets you reimburse yourself for those exact expenses; completely tax-free?
It’s called an Accountable Plan. And if you own an S-Corp, C-Corp, or LLC taxed as a corporation, this might be the most overlooked wealth-building tool in your business.
What Is an Accountable Plan?
Under IRC §62(c) and Treasury Regulation §1.62-2, an Accountable Plan is a formal reimbursement arrangement that allows your business to pay you back for out-of-pocket business expenses, without that reimbursement counting as taxable income.
Read that again: your company writes you a check, and you don’t pay taxes on it.
This isn’t a loophole. It’s not aggressive. It’s literally what the IRS designed for businesses to do. The problem? Almost nobody uses it.
Why This Matters: Pre-Tax vs. Post-Tax
Here’s the math most business owners never learn:
When you pay for business expenses personally and deduct them on your taxes, you’re playing with post-tax dollars. You already paid income tax, payroll tax, and possibly state tax on that money before you spent it. The deduction only gives you partial relief.
But with an Accountable Plan, your business reimburses you before any tax is applied. That’s a 100% write-off for the company and zero taxable income for you. No payroll taxes. No self-employment tax. Just clean, tax-free money back in your pocket.
Think of it as installing a tax-free reimbursement faucet directly into your business. One that turns invisible expenses into visible money.
What Can You Reimburse?
Here’s where it gets good. Under a properly structured Accountable Plan, you can reimburse yourself for things like:
- Home office expenses (rent/mortgage portion, utilities, insurance)
- Mileage (2024 rate: 67 cents per mile; 2025 rate: 70 cents per mile)
- Cell phone (business-use percentage)
- Internet service (business-use percentage)
- Business travel (hotels, flights, meals)
- Professional subscriptions and software
- Office supplies purchased personally
- Client entertainment (within IRS limits)
Every one of these is money you’re probably already spending. The Accountable Plan just makes sure you get it back. Tax-free.
How to Set One Up (It’s Not Complicated)
To be compliant, your Accountable Plan needs three things:
- A written policy: Document the plan formally. Include what expenses qualify, how reimbursement requests are submitted, and the timeline for repayment.
- Board approval: If you have an S-Corp or C-Corp, record a board resolution adopting the plan. This takes five minutes but gives you airtight audit protection.
- Substantiation and documentation: Employees (including you, the owner-employee) must submit receipts or logs within 60 days of the expense. Any excess reimbursement must be returned within 120 days.
That’s it. No special filing with the IRS. No approval needed. You just create the plan, follow the rules, and start reimbursing.
The Real-World Difference
| Expense | Without Accountable Plan | With Accountable Plan |
|---|---|---|
| Home Office ($500/mo) | Pays personally, partial deduction | $6,000/year reimbursed tax-free |
| Mileage (10,000 mi/yr) | Deducts on Schedule A (if at all) | $7,000 reimbursed tax-free |
| Cell Phone ($150/mo) | Personal expense, no deduction | $1,800/year reimbursed tax-free |
| Total Annual Benefit | Maybe $2,000 saved after taxes | $14,800 received tax-free |
That’s not a rounding error. That’s real money.
Make 2026 the Year You Stop Leaving Money on the Table
You didn’t start a business to work harder and pay more taxes than necessary. You started it for freedom; financially, professionally, and personally.
An Accountable Plan is one of the cleanest, lowest-risk strategies available to business owners. It’s legal. It’s simple. And it’s been sitting there, waiting for you to use it.
So here’s my challenge: before January ends, get your Accountable Plan in writing. Adopt it. Start documenting. And watch what happens when you stop treating legitimate business expenses like personal losses and start treating them like what they are: tax-free reimbursements you’ve earned.
This is how you think like a CFO.
This is how you play The Money Game.