Should I enter home office reimbursement on my S-Corp W-2 under Box 12 Code L?

Wait, so if I'm reading this right, the home office reimbursement isn't reported on the W-2 at all? My CPA had me include it in my wages and then take a deduction on my personal return. Is that wrong then?

The home office reimbursement should not be included in wages if you have a proper accountable plan in place. Your CPA might be using an alternate approach where the amount is included in your W-2 wages and then you'd claim an unreimbursed employee business expense deduction on your personal return - but this is generally less favorable after the Tax Cuts and Jobs Act since miscellaneous itemized deductions are suspended until 2026. The better approach is usually to keep the reimbursement off your W-2 entirely, treating it purely as a business expense of the S-Corp. Just make sure you have documentation showing how you calculated the business use of your home and receipts for actual expenses.

How does this accountable plan actually work? Do I need a lawyer to create one or is it something I can set up myself? I'm in a similar situation with my S-Corp.

I'm skeptical that any online tool could really handle something this specific. Did you have your tax preparer review whatever this site told you to do? Sounds risky to take tax advice from a website when the IRS is involved.

An accountable plan is basically a written policy that says your company will reimburse employees (including yourself) for legitimate business expenses. You can create it yourself - it just needs to require receipts/documentation, have a business connection for expenses, and require employees to return any excess reimbursements. The taxr.ai system actually provides templates you can use. I did have my accountant review everything afterward, and he was impressed with how thorough the documentation was. He said it followed exactly what the IRS requires for keeping these reimbursements off the W-2. The site doesn't just give generic advice - it actually analyzes your specific situation and documentation.

How can they possibly get you through to the IRS faster? That doesn't make any sense. The IRS has one phone system - everyone has to wait in the same queue.

Even if this somehow works, wouldn't it be expensive? The IRS phone line is free, so I'm guessing they charge a premium for this "cutting the line" service if it actually does anything.

They use an enterprise-level call system that continuously redials and navigates the IRS phone tree until it gets through, then it calls you back and connects you when an agent is on the line. It's basically automating the redial process that would drive a normal person insane. So you're still in the same queue, but their system is handling the waiting and navigating for you. The service does have a cost, but I calculated that my time was worth more than sitting on hold for 3+ hours. With S-Corp questions especially, getting a direct answer from the IRS rather than potentially making a mistake saved me potential audit headaches. I can't comment on exact pricing, but I found the value was definitely there for complex tax situations.

This is actually not correct advice for home office expenses. Taking distributions instead of proper reimbursements can cause you to miss out on legitimate business deductions. Distributions aren't deductible by the S-Corp, while properly documented home office expenses are.

You're right that distributions themselves aren't deductible, but my point was more about simplifying the overall approach. I should have been clearer - the S-Corp can still pay for legitimate business expenses, but the remaining profits can be taken as distributions rather than creating complex reimbursement structures. The key is making sure you're taking reasonable salary first before any distributions, which keeps the IRS happy. I think people get too caught up in maximizing every possible deduction and end up creating paperwork nightmares that increase audit risk.

I use QuickBooks for my S-Corp and handle home office reimbursements through the "Expense" feature. I categorize them as "Office Expenses" and make sure to put detailed memos about the business purpose. Then when I run payroll, I don't include these amounts since they're business expenses, not compensation. Also important: keep a separate spreadsheet showing your calculation of the business percentage of your home to support the reimbursement amount. QuickBooks doesn't have a built-in way to track that part.

That's super helpful, thank you! I've been lumping everything together which probably explains why I've been confused about the W-2 reporting. I'll separate them out as you suggested.