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    Create a non-taxable reimbursement payroll item

    Article ID: 1000524

    Overview

    You may want to know how to create a Non-Taxable reimbursement payroll item for items such as mileage, travel or non-taxable insurance reimbursements.

    Expected Outcome

    The employee will be reimbursed.

    Assumptions

    You know how much reimbursement you would like to give to the employee.

    Details

    To create reimbursement item:

    Add a new payroll item.

    1. From Lists on the top menu bar, click Payroll Item List.
    2. Click the Payroll Item button, and select New.
    3. Click the Custom Setup option button, and click Next.
    4. Select the Addition item type, and click Next.

    Set up the new item.

    1. Select an expense account to track travel or mileage amounts, or if this will be an advance to the employee, choose an asset account.
    2. Set the Tax Tracking type to None so that the amounts do not report on tax forms, click Next.
    3. For amounts paid per mile, select the Based on Quantity checkbox, click Next.
    4. Select to calculate on net pay, click Next.
    5. Enter a Default Rate, click Finish.

    Add the item to the employee's record.

    1. From Employees on the top menu bar, choose Employee Center.
    2. Double-click the employee's name.
    3. Change the tabs to Payroll and Compensation Info. (In QuickBooks 2013 and higher: Go to Payroll Info tab.)
    4. Add the item from the drop-down list under Additions, Deductions, and Company Contributions.

    When creating paychecks, the addition item will appear in the Other Payroll Items area of the Preview Paycheck screen. If the item is based on quantity, be sure to enter the appropriate amount in the Quantity column.

    2 comments

    Lisa4/12/2013

    How will this show on the W2? will it show as non-taxable reimbursement. We would not want them to be taxed at the end of the year?

    Reply

    Susan5/24/2013

    61

    Hi Lisa,

    If you used the setup from the steps in the article above and used the Tax Tracking type of None, the amount will not affect taxes or tax forms. Thanks for your comment.

    Comments can not be added at this time.

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