Reimbursable expenses are work-related costs that an employee pays out of pocket and then gets paid back by their employer.
In most cases, an expense is reimbursable if it was business-related, allowed under company policy, and properly documented. If it was personal, outside of policy, or poorly documented, the expense may not qualify.
Related: Employee Expense Reimbursement Explained (Full Guide)
Employee reimbursements are different from tax deductions that self-employed workers can make on their own business-related expenses, though their rules are usually very similar.
The line between a business expense and a personal expense is not always obvious unless a company has a clear policy. Here’s what you and your team need to know.
What Makes an Expense Reimbursable?
At the end of the day, a company can reimburse their employees for whatever they want to reimburse them for. However, there are some typical guidelines most companies typically follow.
First, the expense has to be business-related. The expense should exist because of work, not because of the employee’s personal preference or routine living costs.
The expense also has to fit within the company’s reimbursement policy. Some employers may reimburse things like lodging, mileage, travel, and client meals, while others may be more strict.
Finally, the expense should be properly documented/substantiated. That usually means a receipt, mileage log, invoice, or another record showing what was spent, when, and why.
If one of those pieces is missing, an expense most likely should not be reimbursed.
Related: Accountable Plans for Employee Reimbursement Explained
Common Examples of Reimbursable Expenses
Mileage and Travel
If an employee uses their personal car for work, business mileage is often reimbursable. That can include trips to client meetings, travel between job sites, or other approved business-related driving.
Airfare, train tickets, taxis, rideshare trips, parking, tolls, hotels, and other business travel costs are also commonly reimbursed when the trip is work-related.
Meals
Meals are often reimbursable when an employee is traveling for work or taking a client out for a legitimate business purpose.
That doesn’t mean an employee’s everyday lunch is reimbursable. A normal personal meal during a regular workday usually isn’t.
Supplies and Small Business Purchases
Office supplies, printer ink, shipping costs, software subscriptions, and small tools or equipment may be reimbursable if the employee bought them for work and had approval to do so.
Professional Expenses
Some employers reimburse job-related training, conference fees, certifications, licensing costs, or association dues when they directly support the employee’s role.
Remote Work Expenses
This depends heavily on company policy. Some employers reimburse internet, phone use, office equipment, or home office supplies for remote employees, though others don’t.
Related: Mileage Reimbursement Explained
Common Examples of Non-Reimbursable Expenses
Here’s where a lot of confusion commonly happens.
Normal Commutes
Driving from home to a regular workplace is usually considered personal commuting, not a reimbursable business expense.
Personal Meals and Errands
A coffee on the way to work, lunch during a normal workday, or an errand mixed into a work trip is typically not reimbursable.
Entertainment or Upgrades
Luxury hotel upgrades, seat upgrades, minibar charges, personal streaming purchases, and other optional add-ons usually fall outside of most companies’ employee reimbursement policies.
Fines and Tickets
Parking tickets, speeding tickets, and other penalties are usually not reimbursable, even if they happen during work travel. Things like tolls and parking fees are a different story.
Reimbursable Expenses vs. Tax-Deductible Expenses
These are not the same thing. A reimbursable expense is about whether an employer will pay an employee back.
A tax-deductible expense, on the other hand, relates to whether a business or self-employed person can claim the cost for tax purposes. These may overlap in some circumstances, but they aren’t interchangeable.
An expense can be reimbursed under a company policy without being relevant to an employee’s personal tax return. The same expense could also be tax-deductible for a self-employed person.
Related: Is Mileage Reimbursement Considered Taxable Income?
Why a Clear Employee Reimbursement Policy Matters
Two employees can spend money on the same kind of work expense and get different outcomes depending on their respective company’s policies.
One employer may reimburse mileage at the IRS rate, client meals with manager approval, and standard hotel costs during overnight travel. However, a different employer may cap hotel rates, ban alcohol reimbursement, and require preapproval for any purchase over a certain amount.
Reimbursement shouldn’t be treated as a vague common-sense process. It genuinely needs rules.
A good reimbursement policy should explain which expense categories are covered and what documentation employees need to submit. You should also set clear approval requirements, spending limits, and timeframes on how quickly expenses must be submitted after they’re incurred.
Tracking Expenses for Reimbursement is a Must
The easiest way to avoid disputes is for employees to document everything clearly and submit expense reimbursement requests quickly.
Employees should be saving receipts, keeping detailed mileage logs, writing down the business purposes of each expense, and checking the company policy before spending money.
Trouble usually bubbles up when an employee assumes an expense is obviously work-related, then finds out later that it was outside of the company’s policy.
How Companies Can Make Expense Reimbursement Easier
Like we’ve discussed, the first step companies need to take is creating a reimbursement policy. If they don’t, it can lead to rejected expenses, inconsistency, and frustration on both sides.
The best reimbursement systems are clear. Employees know what counts, what doesn’t, and how to submit everything correctly.
How Technology Can Help With Employee Reimbursement
Employee reimbursement can be difficult when your process depends on spreadsheets, email chains, paper receipts, and manual approvals. That’s where technology like dedicated employee expense and mileage reimbursement solutions like TripLog can help companies greatly.
A good reimbursement solution makes the entire process much easier for both employees and employers by putting everything in one place. Employees can log mileage, upload receipts, categorize expenses, and submit reports without having to piece everything together at the end of the month.
Managers and admins can review claims faster, apply policies automatically, and flag errors like duplicate submissions.
Related: Remote Work Expense Reimbursement Explained
Reimbursable Expenses Explained FAQ
What is considered a reimbursable expense?
Usually, a reimbursable expense is a necessary work-related cost paid by an employee that fits within their company’s policy and is properly documented.
Is mileage a reimbursable expense?
Business mileage usually is, but personal trips and commutes don’t.
Are meals reimbursable?
Meals during business travel or things like client meetings are often reimbursable, while ordinary personal meals like lunch during the workday usually aren’t.
Do employers have to reimburse every work expense?
Not necessarily. Reimbursement depends on company policy and, in some cases, state law.
Conclusion
Reimbursable expenses are not just any expense that happened on a workday. They’re also not expenses that self-employed workers deduct on their taxes.
They’re specific business costs that an employer agrees to pay back to an employee, as long as they meet the company’s policy and documentation requirements.
Curious about setting up an expense reimbursement system for your team? Schedule a complimentary demo with the mileage and expense experts at TripLog today!
