Reimbursement definition
/What is Reimbursement?
A reimbursement is a payment made to another party that has incurred an expense on behalf of the paying entity. Reimbursements are commonly made to employees via their expense reports when they expend funds on behalf of their employers. Company policies typically outline which employee payments will be reimbursed by the employer, such as travel costs and certain education-related costs.
Reimbursement is not subject to taxation, since the party being reimbursed ends up in a net zero position, from an income perspective. This is different from compensation, where the receiving party ends up with more assets as a result of the payment, resulting in taxable income.