Taxable Business Expenses after Retirement?

[CRLLS]

Background: Now in my 2nd act. Partly for fun and mostly to help some other friends, I am an officer/share holder in a small C-corp. I do not draw a salary. I do not take any dividends and have no income at all from the company. Nor do any of the other owners. We are currently building the brand so to speak. Our expenses currently offset most, if not all, of any company profit.

I am currently retired and do not receive any W2 nor do I have any other earned income.

Question: If I have business related travel expenses such as airfare, hotel etc, charged to my personal cards, can I somehow be reimbursed by the company without generating a taxable event to me? Not being self-employed or employed by the company, I don't know if this is even possible. I suppose I could call myself self-employed but that makes a lot of paperwork generating a 1099 and on my part filling out a net-zero income on my part. I don't even think I could legally bill the company for such expenses as a self employed independent contractor while being an "officer" of the company.


Can anybody shed some light on this?

 

[38Chevy454]

I don't see where a travel reimbursement would even be considered a taxable event?


Look at the example of a person going for an interview at a company where they have travel expenses. Company reimburses that person, let's assume they do not get/take the new job; the person does not get any 1099 or other form requiring the reimbursement to be taxable to that person.


Or another example, a person has travel expenses for a trust they have some interest in. The trust can reimburse the travel expenses and again there is not any tax liability to the traveler.



Your C-corp would claim the expense as a business deduction against any profits. But I don't see where you personally have any consequence on your taxes.


ETA: I am not a tax person, but try to look at things logically, sometimes can be tough with taxes. But usually once you understand the tax rules, you can figure out what seems right.

 

[Sunset]

I think most folks understand if the company bought the ticket for you to fly for a job, the company claims that expense and you fly without tax consequences as it's not income to you.

Same deal if you buy the ticket, give the receipt to the company and they pay you back the amount of money the ticket cost. This happened to me in various jobs, and never even got paperwork for it. No tax due.

 

[COcheesehead]

Reimbursed business expenses are not a taxable event.

 

[CRLLS]

Got it. Thanks for all the responses.

I always had no tax event with expense reports as an employee. And my only travel expense while job hunting was, ummmm, un-reimbursed by the headhunter or company I interviewed with, (SOB's), so I had no experience in that arena.


I'll just submit the expense to my business and deal with any surprises, if any, later.

 

[OldShooter]

Reimbursed business expenses? Slam dunk. Not income to you.

More broadly, you may have other expenses connected with this business -- mileage to attend board meetings, cost of business lunches, etc. that is not reimbursed. This kind of thing is probably deductible on your taxes.

You should probably read the IRS rules on "hobby businesses" just for good luck, but the key is that for expenses to be deductible in excess of income the IRS must believe that you are engaged in a serious business with a goal of making a profit. But from what you say, that is another slam dunk. They do have a test, IIRC making a profit for 2 out of 5 years, that can establish intent but in your case having a C-corp, presumably with a place of business, etc. probably makes that test unnecessary.

If you have not already done so, I'd suggest consulting a CPA who concentrates on small businesses and startups. He/she can advise you and your partners on how to maximize your current business-related deductions and minimize future taxable income. And the fee would be a deduction.

 

[cathy63]

More broadly, you may have other expenses connected with this business -- mileage to attend board meetings, cost of business lunches, etc. that is not reimbursed. This kind of thing is probably deductible on your taxes.

I'm confused about where on his personal taxes he would be able to deduct expenses associated with supporting a C-corp. The C-corp files its own tax return, so it can deduct expenses that it has reimbursed to other people. There's no longer a place for these unreimbursed business expenses on Sched A, and you can't file Sched C unless you are self employed. Unless OP is going to say that being a consultant/director to the C-Corp is a business in itself, I don't see a place where he can put these expenses on his own return. Am I missing something?

 

[OldShooter]

I could be wrong. It has happened before. I was just going based on personal experience and am not hampered by any detailed expertise in the most current law changes. But, really, your comment underlines the point that the owners should talk to a CPA to maximize the financial benefits they get from the company during this startup and going forward. Thanks for chiming in.