Updated October 2026 · By Mark Schwarz · Reviewed by WellnessFi’s tax team
If your practice is an S-corp, some of your business costs probably come out of your personal account: the room you see telehealth clients in, your cell phone, the drive to a supervision group. An accountable plan lets your practice pay you back for those costs, tax-free to you and deductible for the practice. Below is a free S-corp accountable plan template you can copy, plus the IRS rules, what qualifies, and a worked home office example.
What is an accountable plan?
An accountable plan is a written company policy for paying employees back for business costs they paid personally. When the plan follows three IRS rules, the reimbursement isn’t taxable income to the employee, and the business still deducts it. S-corp owners use one to reimburse themselves.
Why S-corp owners need one
When your practice is an S-corp, you’re an employee of your own business. That’s what lets you pay yourself a reasonable salary and take the rest as distributions. It also means that money the practice hands you for “expenses,” with no plan behind it, can be treated as wages. Wages come with payroll taxes and show up on your W-2.
An accountable plan draws a clear line. Salary is pay for your work. Distributions are your share of the profit. Reimbursements under the plan are neither. They just put back money you spent on the practice.
Do you need an accountable plan?
Yes, if your practice is taxed as an S-corp and you ever pay a business cost personally. The same goes for C-corps.
No, if you’re a sole proprietor or a single-member LLC taxed as one. You aren’t an employee of your practice, so there’s no one to reimburse. You deduct these costs directly on your tax return instead. See our guide to the home office deduction for how that works.
Partnerships and multi-owner LLCs follow different rules. Ask your tax advisor before you set anything up.
The three IRS accountable plan rules
Your plan has to meet all three. If it doesn’t, the IRS can treat the reimbursements as wages.
- Business connection. The cost has to be for your work for the practice. A cell phone you use for client calls qualifies. A family streaming subscription doesn’t.
- Proof. Within a reasonable time, you give the practice the date, amount, and business purpose of each cost, with receipts, bills, or a mileage log. The IRS treats 60 days as reasonable, so that’s what our template uses.
- Return any extra. If the practice pays you more than you can document, you pay the extra back within a reasonable time. The IRS treats 120 days as reasonable.
These rules come from Treasury Regulation Section 1.62-2. IRS Publication 463 explains them in more detail.
What you can reimburse, and what you can’t
The plan is for costs that are split between your business and your personal life. If something is 100% for the practice, like your EHR subscription or a CEU course, pay it straight from the business account or card instead. That’s simpler and needs no reimbursement.
| Usually qualifies | Doesn’t qualify |
|---|---|
| The business-use share of rent or mortgage interest, property taxes, home insurance, utilities, HOA dues, and whole-home repairs | Mortgage principal |
| Costs only for your office space, like painting or repairs in that room | Health or dental insurance, and medical costs (owner health insurance runs through payroll instead) |
| The business share of your cell phone and home internet | Personal clothing, groceries, and gym memberships |
| Business miles in your personal car | Commuting between home and a regular office |
| Business purchases you paid for personally, like forms bought with a personal card | Anything the practice already paid for or that you deduct on your personal return |
Accountable plan home office reimbursement, step by step
The home office is usually the biggest number on the plan, especially for therapists who see telehealth clients from home.
Step 1: Check that the space qualifies. The space has to be used regularly and only for your practice. A spare room set up as your telehealth office counts. The kitchen table doesn’t. If your practice also rents an outside office, talk with your tax advisor before you reimburse a home office.
Step 2: Find your business-use percentage. Divide the office’s square footage by your home’s total square footage.
Step 3: Apply it to each home cost. Multiply your monthly rent or mortgage interest, utilities, insurance, and similar bills by that percentage. Costs for the office alone, like painting it, count in full.
Example: Your office is 150 square feet in a 1,500-square-foot apartment, so your business-use percentage is 10%.
| Monthly cost | Amount | Business share (10%) |
|---|---|---|
| Rent | $2,000 | $200 |
| Electricity and gas | $180 | $18 |
| Renters insurance | $20 | $2 |
| Monthly reimbursement | $220 |
Over a year, that’s $2,640 the practice pays you back. You don’t pay income tax on it, and the practice deducts it.
If you own your home, depreciation can also be part of a home office reimbursement. It affects your taxes when you sell, so ask your tax advisor before including it.
Phone, internet, and mileage
Cell phone and internet. Reimburse the share you use for work. Pick a percentage you can explain, like the portion of your calls, texts, or data that’s for clients and the practice, and write down how you got it. If you pay $90 a month for your phone and about half its use is for work, the practice reimburses $45 a month.
Mileage. Business miles in your personal car are reimbursed at the IRS standard mileage rate, which changes each year. You can find the current rate on the IRS standard mileage rates page. Keep a log with the date, where you went, the business purpose, and the miles. Write each trip down the same day or week.
Trips that usually count for therapists:
- Driving to see a client at home or at school
- Traveling between two offices
- Going to a supervision or consultation group
- Driving to a CEU training or conference
- Running practice errands, like the bank or an office supply store
Driving between your home and your regular office is commuting, and it doesn’t count. The exception is when your home office is your main place of business. If you’re not sure which applies to you, ask your tax advisor.
How accountable plan reimbursement works
Once your plan is in place, the routine is short.
- Track costs as they happen. Keep bills, receipts, and your mileage log in one place.
- Add them up monthly or quarterly. Monthly keeps you well inside the 60-day proof window. Quarterly works too, if you stay on top of it.
- Pay yourself back with a transfer. Move the total from the practice’s business account to your personal account. Keep it separate from payroll, so a reimbursement is never mixed up with your salary.
- Record it in your books. Your bookkeeper records each reimbursement as the right kind of expense: home office, phone, auto, and so on.
- Reimburse by December 31. Most practices use cash-basis accounting, which means a cost counts on this year’s return only if the practice pays you back by December 31.
Your free S-corp accountable plan template
Copy the policy below into a document, fill in the bracketed parts, and sign it. Keep it with your business records. A written, signed policy is your best proof that the plan existed before you reimbursed yourself.
Accountable Plan Policy
[Practice legal name], a [state] entity taxed as an S corporation (the “Company”)
1. Purpose. The Company adopts this accountable plan to reimburse its employees, including owner-employees, for ordinary and necessary business expenses they pay with personal funds while performing services for the Company. The Company intends this plan to meet the requirements of Internal Revenue Code Section 62(c) and Treasury Regulation Section 1.62-2, so that reimbursements made under it are not wages.
2. Expenses covered. The Company will reimburse the following when an employee pays them personally for the Company’s business: (a) the business-use share of costs for a home office used regularly and exclusively for the Company’s business, based on square footage; (b) the business-use share of cell phone, internet, and similar mixed-use services; (c) business miles driven in a personal vehicle, at the IRS standard mileage rate in effect on the date of travel; and (d) other ordinary and necessary business expenses. Personal, living, and family expenses are not covered.
3. Business connection. Each expense must be paid or incurred while the employee is performing services for the Company.
4. Substantiation. Within 60 days after an expense is paid or incurred, the employee will give the Company a written expense report showing the date, amount, place or vendor, and business purpose of each expense, with receipts, bills, or a mileage log kept at the time of travel. Home office and shared-service costs may be supported by the monthly bills and the business-use calculation. The Company will not reimburse an expense that is not substantiated.
5. Returning excess amounts. If the Company pays more than the employee substantiates, the employee will return the excess within 120 days after the expense is paid or incurred. Any excess not returned will be treated as wages.
6. Reimbursement. The Company will reimburse approved expenses on a [monthly / quarterly] basis, by transfer from the Company’s business account, within 30 days after it approves the expense report. Reimbursements will be paid separately from payroll.
7. No double benefit. An expense reimbursed under this plan may not be reimbursed again or deducted by the employee on a personal tax return.
8. Records. The Company will keep expense reports and supporting documents for at least seven years.
9. Effective date. This plan is effective [date] and stays in effect until the Company changes or ends it in writing.
Adopted by the Company and acknowledged by the employee:
______________________ Date: __________
[Owner name], [title], on behalf of [practice legal name]
______________________ Date: __________
[Owner name], Employee
This sample is general information, not tax or legal advice. Review it with your tax advisor before you adopt it.
How to set up your accountable plan in four steps
- Fill in and sign the policy. Use the template above. Date it on or before the first expense you plan to reimburse.
- Set your percentages. Measure your home office, and decide on a business-use percentage for your phone and internet. Write down how you got each one.
- Track costs each month. Save bills and receipts, and keep your mileage log current.
- Reimburse yourself on a schedule. Monthly or quarterly, by transfer from the business account, and always by December 31.
Common accountable plan mistakes
- Running reimbursements through payroll. It blurs the line between wages and reimbursements. Pay them as a separate transfer.
- No receipts or no mileage log. Without proof, a reimbursement can be treated as wages.
- Reimbursing personal costs. Dental bills, clothing, and family groceries don’t belong on the plan, even if you paid for them with a business card.
- Waiting until after December 31. Costs reimbursed in January count on next year’s return, not this year’s.
- Deducting the same cost twice. If the practice reimbursed it, don’t also deduct it on your personal return.
- No written policy. A signed policy shows the plan existed before you paid yourself back.
Want your accountable plan set up for you?
WellnessFi sets up accountable plans as part of our S-corp setup, along with your reasonable salary and payroll. Your tax advisor, part of a team that includes a CPA and IRS Enrolled Agents, helps you set your percentages and answers your “am I doing this right?” questions through your first year. If you’re not an S-corp yet, start with should your practice be an S-corp.
Frequently asked questions about S-corp accountable plans
Does an S-corp need a written accountable plan?
The IRS rules don’t say the plan must be written, but a signed policy is the best way to show your plan existed and that you followed it. Without one, it’s harder to prove your reimbursements weren’t wages. Our template takes about 15 minutes to fill in and sign.
Is there a sample accountable plan for an S-corp I can use?
Yes. This page includes a free S-corp accountable plan template you can copy, fill in, and sign. It covers home office, phone and internet, mileage, and other business costs, plus the 60-day proof window and 120-day return rule. Review it with your tax advisor before you adopt it.
Can I reimburse my home office if my practice also rents an office?
Sometimes, but it’s harder. The home space has to be used regularly and only for your practice, and the IRS looks at whether you need it for the business. If you also rent an outside office, talk with your tax advisor before you reimburse a home office.
How often should I reimburse myself?
Monthly or quarterly works for most practice owners. Monthly keeps your records clean and well inside the 60-day proof window. Whatever schedule you pick, pay yourself back by December 31 so the costs count on this year’s return.
What happens if I don’t have an accountable plan?
Money your practice pays you for expenses without a plan can be treated as wages. That means payroll taxes on it and more income on your W-2. The practice may also lose the deduction for those costs as business expenses. An accountable plan avoids both problems.
Can I reimburse my health insurance through an accountable plan?
No. Health insurance for an S-corp owner is handled through payroll, not the accountable plan. Dental bills, other medical costs, and personal items like clothing don’t belong on the plan either. Ask your payroll provider or tax advisor how to set up owner health insurance correctly.
Do sole proprietors need an accountable plan?
No. A sole proprietor, or a single-member LLC taxed as one, isn’t an employee of the practice, so there’s nothing to reimburse. You deduct business costs, including a home office, directly on your tax return. An accountable plan becomes useful once your practice is taxed as an S-corp.
What records should I keep for my accountable plan?
Keep your signed policy, monthly bills, receipts, your mileage log, how you calculated each business-use percentage, and a record of each reimbursement transfer. Keep them for at least seven years. A simple folder or spreadsheet for each year is enough.
The bottom line
An accountable plan is one of the simplest ways for an S-corp practice owner to stop paying tax on money spent on the business. Copy the S-corp accountable plan template above, sign it, track your costs, and pay yourself back on a schedule. If you’d rather have it set up for you, along with your salary and payroll, we’d be glad to help.
