How do we set up an expense reimbursement or petty cash policy for our HOA?

By OurHOA · General information · Revised October 18, 2026

How to write an HOA expense reimbursement policy for volunteers: approval limits, receipts, deadlines, mileage, petty cash, 1099 rules and a form to copy.

Part of the HOA board handbook: treasurer and money.

The short answer

Volunteers in a self-managed HOA buy things for the association all the time: pool chemicals, a replacement lock, stamps for the annual meeting notice, coffee for the workday. Paying them back is normal and, in most states, allowed. What goes wrong is the method. A director hands the treasurer a crumpled receipt three months later, the treasurer pays from memory, and nobody can tie the check to an approval. Adopt a one-page policy that says who may spend, how much without asking first, what counts, what proof is required, and how fast the claim must come in. Pay every claim by check or bank transfer against receipts. Skip the cash box unless you have a real need for one. Rules vary by state and by your governing documents, and this guide is general education, not legal or tax advice.

What state law says about paying volunteers back

Florida is the most direct. Section 720.303(12) bars HOA directors, officers and committee members from receiving salary or compensation for their service, but paragraph (b) allows reimbursement for out-of-pocket expenses incurred on behalf of the association, approved under procedures in the governing documents or, if there are none, under an approval process the board sets. A Florida board without a written process should adopt one, because the statute assumes it exists. Colorado section 38-33.3-209.6 lets the board reimburse directors, as a common expense, for actual and necessary costs of attending Colorado-specific education on running an association. Beyond that, the reimbursement power comes from your bylaws and the board's general authority. Texas chapter 209 does not address reimbursement. Look to your bylaws and certificate of formation. Every state treats the paper trail as an association record. Florida section 720.303(4)(a)10.a requires itemized records of all receipts and expenditures, kept at least seven years. Colorado section 38-33.3-317(1)(a) requires detailed records of receipts and expenditures. Texas section 209.005(c) opens financial records to owners, and 209.005(m) requires associations with more than 14 lots to keep financial books and records for seven years. Assume any owner can read every reimbursement claim.

The rules the policy should set

Who may spend. Directors, officers and named committee chairs. Other volunteers need a director's approval before buying. How much without asking. Pick a small number, such as $150 per purchase, and require advance approval by the treasurer or president above it. Anything that would exceed the spending limits in your purchasing policy follows that policy instead. Our guide on whether an HOA needs a purchase order or spending approval policy covers those tiers. What counts. Supplies, postage, printing, small repairs, filing fees, approved education and mileage for association errands. What does not: alcohol, gifts to directors, meals among directors, and anything bought for a director's own lot. Proof. An itemized receipt for every claim, not a card slip showing only a total, plus a line on what it was for. No receipt means no payment unless the board approves an exception in the minutes. Deadline. Claims within 60 days of the purchase. The figure comes from the IRS accountable plan rules in 26 CFR 1.62-2(g), which treat substantiation within 60 days and return of any excess advance within 120 days as reasonable. Those rules are written for employees, but they give a volunteer board a defensible clock. Claims arriving after the fiscal year closes should go to the board. Who approves. Never the person being paid. The treasurer approves other people's claims, and another officer approves the treasurer's.

Mileage

If volunteers drive for the association, pay a per-mile rate rather than gas receipts. Gas receipts cannot show how much of a tank went to the association. Many boards adopt the IRS business standard mileage rate, which was 72.5 cents a mile for January through June 2026 and 76 cents from July 1, 2026. The board can choose a lower rate or a flat amount per trip. Whatever you pick, write it into the policy, and require a log with the date, destination, purpose and miles. Keep it to real errands: driving to the bank to deposit checks, picking up pool supplies, meeting a vendor at the site. Driving to board meetings inside the neighborhood is not an errand.

If you keep petty cash

Most associations of 26 to 150 homes do not need petty cash. A debit card held by the treasurer with a low limit, or plain reimbursement, leaves a better record. If you do need cash, for example for a seasonal pool attendant buying small supplies, run it as a fixed fund. Set the fund at a fixed amount, such as $100, approved by motion. One custodian holds it in a locked box. Every withdrawal gets a receipt or a signed slip naming the purchase. At month end, a second person counts the cash, adds the receipts, and confirms the two total exactly $100. The treasurer then writes a check to replenish the fund for the receipt total and records each expense in the correct budget line. Never pay dues refunds, vendors or volunteers from petty cash, and never put owner cash payments into it. Our guide on HOA fidelity bonds and embezzlement protection explains why small unwatched funds are where losses usually start.

Taxes and the 1099 question

The IRS instructions for Forms 1099-MISC and 1099-NEC list expense reimbursements paid to volunteers of nonprofit organizations among payments that are not reported in box 1a of Form 1099-NEC. Most HOAs are nonprofit corporations, but ask your CPA whether that exception covers yours. Reimbursement only for documented association expenses keeps you on the safe side. A flat monthly allowance to a director is not a reimbursement. In Florida it also runs into the compensation ban in section 720.303(12). For payments for services made in tax years beginning after 2025, the 1099-NEC reporting threshold rose to $2,000, with inflation adjustments possible from 2027. That threshold applies to vendors, not to properly documented volunteer reimbursements. One more reason to reimburse promptly: IRS Publication 526 lists homeowners associations among organizations that cannot receive deductible contributions. A volunteer who pays an HOA expense and is never repaid cannot deduct it the way they could for a charity.

Policy wording and a claim form

Policy paragraph: Directors, officers and committee chairs may incur expenses on behalf of the association up to $150 per purchase without advance approval. Larger purchases require written approval from the treasurer or president before purchase. Claims must be submitted within 60 days on the association's reimbursement form with itemized receipts. Mileage for association errands is reimbursed at the IRS business standard mileage rate in effect on the date of travel. No person may approve their own claim. The treasurer reports all reimbursements to the board monthly. The form needs eight fields: name, date of purchase, vendor, amount, budget category, purpose, approver signature and date paid with check or transfer number. Attach the receipts and file the form with the bank statement for that month. Motion: Moved to adopt the expense reimbursement policy as presented, effective January 1, and to replace any prior practice of reimbursing expenses without written claims.

Mistakes to avoid

Reimbursing in cash from dues collected at the pool. Two errors in one transaction. Paying a claim the treasurer submitted and approved for themselves. Letting claims pile up until year end, when receipts are lost and the expense lands in the wrong budget year. Paying a director for their own hours spent repairing the common area and calling it a reimbursement. Materials are an expense. Labor is compensation. Adopting a policy and never reporting against it. A monthly list of reimbursements in the board packet takes five minutes and answers the owner who asks where the supplies money went.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

More on pets & parking

Or browse all pets, parking & vehicles guides.