If an employer does not provide reimbursement, an employee may reduce compensation by the allowable expenses actually incurred. If a reimbursement is more than the allowable expenses, the excess must be reported as taxable compensation on Line 1a of the PA-40, Personal Income Tax Return.

Example: Dave earned compensation of $30,000. He incurred allowable vehicle and travel employee business expenses of $3,000, and was reimbursed $3,500. He must complete a PA Schedule UE. He includes the excess $500 as compensation. His total net taxable compensation is $30,500.

← Multiple Employers Statutory Employees →