Verne Hargrave has a great, short explanation at Faith Based Accounting on how to handle expense reimbursements.
Question #1 – What is the best way to handle expense reimbursements?
Extremely short summary:
- Have a written policy
- Require compliance with IRS policies (document purpose, who was there, proper documentation).
- Require timely return of any advances.
See the post above for good explanation.