Get paid back, tax-free: the accountable plan

Who this is for

• Employees who pay business costs for the company, including S-corp owner-employees.
• The regulation has three requirements:¹
  • a business connection,
  • substantiation to the company within a reasonable period, and
  • returning any excess within a reasonable period.

The 2026 numbers

• Business standard mileage rate: 72.5¢ per mile for Jan 1 – June 30, 2026, and 76¢ per mile for July 1 – Dec 31, 2026. The IRS raised it mid-year.²³
• "Reasonable period" safe harbor: substantiate within 60 days and return any excess within 120 days of when the expense was paid or incurred. Advances should come within 30 days of the expense.¹

How to do it right

1. Adopt a written plan. One or two pages, approved by the company (board minutes or an owner resolution for S corps). List the covered categories: mileage, phone, home office, travel, supplies.
2. Mileage: keep a log with date, destination, business purpose, and miles. Reimburse at the IRS rate for the date driven, so June and July miles use different rates this year.⁴
3. Phone and internet: reimburse the business-use share, backed by the bill and a reasonable allocation.
4. Home office (owner-employees): measure the space used regularly and exclusively for business. Figure its share of rent or mortgage interest, utilities, insurance, and similar costs, and submit it with receipts.
5. Submit monthly or quarterly with receipts. Pay back any unused advance within the safe-harbor window.
6. Pay from the business account and book it as an expense, not payroll. Reimbursements under the plan stay off the paycheck.

Running an S corp? Pair this with a reasonable salary and you’ve covered two of the biggest owner wins.

Run it by your CPA

Have your CPA look over your written plan once. After that, it’s a monthly habit.

Every business is a little different, so check with your CPA for your situation. Good CPAs are on your team, and they love an owner who shows up with the homework done.

More from Dad’s tax playbook

• When the S-corp election pays off: Payroll tax saved minus the cost of running an S corp. The two-column math and Form 2553 timing.
• Put your kids on payroll: By business type: when kids’ pay skips FICA, their standard deduction, and the Roth IRA angle.
• Put your spouse on payroll: Social Security credit in their name, their own 401(k) deferrals, and the QJV option.
• S-corp owner health insurance: W-2 Box 1 only, then Form 7206. One payroll setting, one form.
• The Augusta rule: Rent your home to your company for real meetings, fewer than 15 days a year.
• The Solo 401(k): Two hats, two contributions: 2026 limits, deadlines and the S-corp angle.
• Work Opportunity Tax Credit: watch this space: Lapsed for 2026 hires so far. Where it stands, and the playbook if Congress revives it.
• PTET: let your business pay the state tax: How pass-through entity tax elections work around the personal SALT cap.
• Dial in your W-4: Step 2(c), Step 3 and Step 4(c) for owners, spouses and kids on payroll.
• S-corp reasonable salary by profession: pay ranges for 15 professions, the IRS factors and a one-page salary memo.

Payroll Dad is a cartoon run by a real small family business. This is general education, not tax advice for your situation.