What is an "in and out" in payroll?

In-and-out is more than just a hamburger. It’s getting paid animal style.

(For those of you who don’t live in states with an In-N-Out Burger, you’re not missing anything but a bad pun.)

Let’s say your company offers a benefit where they reimburse you for every In-N-Out burger you buy. 

Every day on your way home from work, you go through the drive through and pick up dinner for your family. 

Every Monday, you submit your receipts from the past week for reimbursement.

The IRS says that meals are reimbursable when you’re traveling, but not when you’re at home.

Unless you’re going through the drive thru with business people and talking about business things, you’re supposed to pay for your own dinner.

So your company’s In-N-Out reimbursement policy is a taxable benefit. But how do you tax a burger that's already in your belly?

In payroll, this problem is solved with what’s called an “in-and-out.”

In:

You get paid imputed pay for that week’s burger budget.

Imputed pay is “fake dollars” that are only entered so taxes can be taken out. 

If it stopped here, your paycheck would be less. 

You'd pay for the burger and get taxed on it a second time.

-N-

Out:

You get a nontaxable reimbursement for the amount of your weekly burgers.

That way, you get your burger budget back with Uncle Sam getting a bite.

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