Travel reimbursement timeline to avoid taxation
About this policy
Policy contact:
Anna Dove
annadove@iu.edu
Date of last update:
July 2, 2025
Indiana University follows the IRS Accountable Plan for reimbursing travel, procurement card (P-Card), and out-of-pocket business expenses incurred by employees and non-employees. Under this plan, reimbursements are not considered taxable income as long as the individual submits appropriate documentation within a reasonable timeframe. If the timeline requirements of the Accountable Plan are not met, the expense is subject to IRS non-accountable plan rules and may be treated as taxable income to the individual.
What's changing?
On July 1, 2025…
- Expense reporting deadlines are shorter
- How age of expense is calculated
- Types of transactions that will be considered taxable income
Key dates to know:
- July 1, 2025: New policy begins
- October 1, 2025: 120-day reimbursements will be blocked
- Oct–Dec 2025: Grace period; notifications sent, no W-2 impact yet
- January 2, 2026: Late reimbursements will be taxable on W-2s
Travel reimbursement timeline to avoid taxation
- Travel reimbursement: 60 days from trip end date
- Out-of-pocket reimbursement: 60 days from purchase date
| Timeframe | Can be reimbursed? | Taxable income? |
| 0-60 days | Yes | No |
| 61-120 days | Yes | Yes |
| 121+ days | No | Not Applicable |
No reimbursement after 120 days.
Pre-paid & P-Card expense timeline to avoid taxation
- Prepaid travel: 60 days from trip end date
- P-Card purchase: 60 days from purchase date
| Timeframe | Can be reconciled? | Taxable income? |
| 0-60 days | Yes | No |
| 61-120 days | Yes | Yes |
Prepaid expenses must be reconciled regardless of their age. There is no 120-day cutoff.
Who will be taxed?
P-Card: individual who used the P-Card
Out of pocket: expense owner
Travel: the traveler, including non-employee travelers
For additional questions please reach out to Anna Dove at annadove@iu.edu.