Remote Work Expense Reimbursement Requirements | Should Companies Reimburse Work From Home Expenses?

Dimitri Gedevanishvili

Dimitri Gedevanishvili

Marketing Manager
woman working from home remote working during covid 19 pandemic

As the world continues to grapple with the COVID-19 pandemic, many people are still working from home. According to the Pew Research Center, “roughly six-in-ten U.S. workers who say their jobs can mainly be done from home (59%) are working from home all or most of the time”.

Your employees may be asking you to reimburse some of the costs that they incur while conducting business on behalf of your company working from home. Some of the expenses that they may incur include:

  • Internet costs
  • Equipment and hardware (laptops, headphones, office chairs, etc.)
  • Electricity
  • Office supplies (printer ink, paper, etc.)

Am I Required to Reimburse My Remote Workers By Law?

There are no federal laws requiring you to reimburse your employees for work expenses that they incur. The only exception to this rule is if their expenses would cause them to fall below the minimum wage.

Still, some states and jurisdictions have individual laws and regulations regarding expense reimbursement, including expenses related to telecommuting and remote work.

Which States Require Expense Reimbursement For Remote Work?

The following states have some sort of expense reimbursement laws. Click the name of the state to learn more about its specific requirements. 

Related: Mileage Reimbursement Requirements By State

Should You Reimburse Your Remote Workers’ Expenses?

As mentioned previously, there is no federal law mandating companies to reimburse their remote workers’ expenses. Most companies do choose to have some sort of expense reimbursement policy, however.

Offering expense reimbursement can be a great way to attract and retain high-quality candidates.

Coming Up With a Work From Home Reimbursement Plan

Should you choose to reimburse your remote workers’ expenses, you should take the time to develop a comprehensive written reimbursement plan so as to eliminate any confusion. Set specific guidelines and boundaries that your payroll, HR, and management teams, as well as your WFH employees, will be able to easily follow. 

For example, if your employee’s internet bill is $100 per month and you calculate that 1/3 of their day is spent working, then you would reimburse them for $33.33 each month for their internet. You can then apply a similar formula for other expenses that your employees claim.

Related: How Employees Working From Home Deduct Their Mileage

Does your team need specific work laptops? Are ergonomic office chairs a necessary expense? Since most jurisdictions don’t have any specific reimbursement requirements, the onus on what or what not to reimburse falls on you. 

Should Your Company Stay Remote or Return to the Office?

If you’re trying to decide whether you should stay remote or bring people back to the office, that can be a difficult question. This is a multi-faceted question that can have many angles.

One of the easier ways to answer this question is to go at it from a monetary angle. While the upfront cost of, say, buying your team office chairs for their homes may seem like a lot, and “while these costs add up, they are likely still less than the real estate and facility costs for having people work in the office” (SHRM).

Your employees may appreciate the perks that come with remote work as well. The extra hour they get to sleep in in the morning and the extra hour they get to spend with their families can go a long way to getting your team to appreciate their work and may even boost their productivity. 

man-working-from-home-remote-work

Tracking Work From Home Expenses

No matter what, your employees will need to provide proof of their expenses if they want to be reimbursed. One method would be to gather up all of their receipts every month and then manually process them one by one.

Such a method would take significant amounts of time and effort that you simply shouldn’t need to invest. Thankfully, modern tools and apps make expense reimbursement an absolute breeze.

Modern Tools Make Tracking Remote Work Expenses a Breeze

Despite being designed for companies with mobile employees, TripLog’s expense tracking features can be used by any company needing to reimburse their teams. Your workers can input all of their expenses into the TripLog app, and TripLog will produce high-quality expense reports.

Related: IRS Mileage Commuting Rule: What Businesses Need To Know

They can even attach receipts, connect their bank accounts, and companies can create custom expense categories! To learn more about TripLog’s expense tracking features, schedule a complimentary web demo with our team today.

Are Work From Home Expense Reimbursements Tax-deductible?

The IRS only lets employees claim a tax deduction on their business expense reimbursements if:

  • “There is a business connection to the expenditure.
  • There is adequate accounting by the recipient within a reasonable period of time. 
  • Excess reimbursements or advances are returned within a reasonable period of time.”

If these specific requirements are not fulfilled, then the reimbursement is considered income and therefore must be reported as taxable. 

Home Office Deduction For Remote Workers

If you are an employee who has an office set up in your home, you cannot use or claim the home office deduction. This deduction is solely for independent contractors and self-employed workers.

Related: Are You An Independent Contractor Or An Employee?

Conclusion

The post-COVID world can be a tricky place for companies to navigate. The changing landscape presents many unique challenges to business owners.

When it comes to mileage and expense reimbursement, solutions like TripLog help alleviate some of that stress and uncertainty. To learn more about TripLog’s company mileage solutions, visit our pricing page, or schedule a live demo today.

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Annual Mileage Reimbursement

50 mi/day x 100 drivers x $0.54 (5 days x 50 wks)

$675,000

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According to research, on average employees inflate the mileage by 25% when self reported.

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2 mins x 10 trips/day x 100 drivers (5 days x 50 wks)

8,334 hr

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