Prepaid Expenses


K

Kreager

My employer wants to pay a portion of my income in prepaid
expenses. I understand that this will lower their taxes but
if I intend to be an honest taxpayer I'm guessing there is
no value in this for me.

Is there a loophole/benefit to this as an employee or do I
have to report the prepaid expense as income? Please
advise.
 
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J

John H. Fisher

My employer wants to pay a portion of my income in prepaid
expenses. I understand that this will lower their taxes but
if I intend to be an honest taxpayer I'm guessing there is
no value in this for me.

Is there a loophole/benefit to this as an employee or do I
have to report the prepaid expense as income? Please
advise.
If your employer has a plan to reimburse you for expenses,
your employer may deduct those expenses and they would not
be reportable by you. If your employer does not have an
accountable plan, the income must be reported to you as
wages. You might then be able to deduct the expense, as an
itemized deduction, on Schedule A (Form 1040). The
deduction is reduced by 2% of your adjusted gross income and
may be of no benefit, unless using them helps you exceed
your standard deduction.

"Jack" - John H. Fisher - (e-mail address removed)
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=:)
 

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