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A recent decision reported by the American Institute of CPAs (the AICPA) addresses a niche issue of what expenses can be considered reimbursable and which are non-reimbursable when weighing the needs of employees with the duties of employers.

The decision indicates a construction worker who decided on his own volition to use his car to commute to and from job sites, as well as from distant sites where all or most of the rest of the crew stayed on location over night, would not be allowed to receive reimbursement for any expenses related to his car as the vehicle expense was deemed personal in nature.

It was found that the man’s travel expenses weren’t ordinary or necessary to perform his job duties, as outlined by Code Sec. 262. His desire to return home each night from far away job sites was determined to be due solely to wanting to care for a chronically ill child. Though a noble cause in the eyes of most, this reason is holistically unrelated to the man’s employment and therefore was not approved as an expense for reimbursement. Compounding the issue, it appears the man was in violation of his employer’s travel policy by neglecting to ask to use a company vehicle or gain supervisory approval for all the extra commuting before seeking reimbursement for such expenses. Apparently under his employer’s travel policy, most of the man’s travel expenses would have either been circumvented or approved had he sought prior approval.

The worker was also denied the ability to claim other job-search expenses (postage), even though it was considered acceptable for him to seek additional work based on the hours being offered by his current employer and his need to make extra money to help pay for care of his sick child. This is due to the fact that the man could not show the expenses he was incurring during his job search had amounted to greater than two percent of his adjusted gross annual income. Code Sec. 67 indicates one can only claim such expenses if they meet or exceed the two percent threshold.

Source: American Institute of CPAs (AICPA) News via J.P. Arnold, TC Memo. 2010-223, Dec. 58,357(M)