Running a clinic means you’ll occasionally need to cover costs for your team. Some payments are taxable, while others can be non-taxable. The distinction matters for compliance, payroll accuracy, and avoiding tax surprises for your staff.

This guide breaks down the rules in plain language and gives examples tailored to ABA practices.

What’s the difference?

At a high level:

• Stipends are taxable income.

• Reimbursements can be non-taxable if they follow the IRS “Accountable Plan” rules.

• If reimbursements don’t follow those rules, they become taxable.

Let’s break each category down.

1. Stipends (Taxable)

A stipend is a flat payment to an employee that is not tied to an exact business expense. Because it’s not documented as a direct reimbursement, the IRS treats it like regular wages.

Stipends are always taxable.

They must:

• run through payroll

• be included in gross wages

• be subject to federal/state income taxes

• be subject to FICA taxes (Social Security and Medicare)

Common stipend examples in ABA practices

• Technology stipend (e.g., 50 per month for phone or internet)

• Training stipend not linked to a specific course receipt

• General “gas stipend” instead of mileage per trip

• Clothing stipend (e.g., scrubs allowance paid as cash)

• Wellness or childcare stipend

Even if the stipend is meant to offset a business-related cost, it’s taxable because you aren’t verifying actual expenses.

2. Reimbursements (Potentially Non-Taxable)

A reimbursement is repayment of a specific business expense.

Reimbursements can be non-taxable if your practice follows the IRS “Accountable Plan” rules. These rules require:

1. Business purpose
   The expense must have a legitimate business reason.

2. Substantiation
   The employee must provide receipts or mileage logs.

3. Return of excess
   If you give an advance and they spend less, they must pay back the difference.

If all three conditions are met, the reimbursement is non-taxable and does not show up in payroll wages.

Common non-taxable reimbursements in ABA practices

• Mileage reimbursement at the IRS rate for client travel

• Actual gas receipts (less common but allowed when documented)

• Materials for sessions or assessments (receipts required)

• CEU costs when tied to job requirements

• Background check fees

• Fingerprinting or credentialing fees

• Client-specific supplies purchased by the RBT/BCBA with receipts

• Parking or tolls during client travel (with receipts)

These do not count as income, as long as the employee documents the expense.

3. Reimbursements that become taxable

If your practice does not follow an accountable plan, reimbursements automatically become taxable wages.

Examples:

• Paying a flat “mileage reimbursement” without logs

• Paying “gas money” as a set amount

• Paying for CEUs without receipts

• Giving someone 150 for materials without receipt tracking

• Any payment where the actual cost is unknown

These must go through payroll just like stipends.

4. Quick Reference Table

5. How to set this up inside your payroll workflow

For taxable stipends:

• Set them up as earnings in payroll

• Withhold taxes like normal

• Include in W-2 wages

For non-taxable reimbursements:

• Use a non-taxable reimbursement category

• Require receipts or logs

• Store documentation for compliance (we recommend at least 3–7 years)

If your payroll system doesn’t support clean reimbursement categories, this is worth fixing early—it saves headaches at year-end.