What is the difference between a reimbursement and a payout?

Audience: Company, Requesters

In Reimbi, a payout is any payment sent to a requester. There are two kinds: reimbursements and direct payouts.

Reimbursements

A reimbursement comes from an approved expense report.

1. The company invites a requester to Reimbi.
2. The requester submits an expense report.
3. Once the report is approved, Reimbi sends the requester a reimbursement for the approved amount.

Reimbursements pay back actual expenses, so they are generally not taxable. Reimbi does not collect a W-9 or W-8BEN for reimbursements, and it does not issue a 1099 for them.

Direct payouts

A direct payout has no expense report. Referral bonuses, honoraria, and stipends are common examples.

1. The company enters the payout amount and the requester’s contact information.
2. Reimbi tells the requester they have a pending payout.
3. The requester chooses how to receive the funds, and Reimbi sends the payout.

Direct payouts are generally taxable income. When a requester claims a direct payout, Reimbi collects their tax information: a Form W-9 for US requesters or a Form W-8BEN for non-US requesters. Reimbi passes this information to the company. The company decides how the payout is taxed and issues any required 1099. Reimbi does not issue 1099s.

At a glance

This article is general information, not tax advice.