seperating out on reserve income

QuickBooks Online Payroll does not currently offer a native, automated toggle for splitting on-reserve and off-reserve income. However, you can manage this by processing two separate payroll runs. You would run the off-reserve hours as a standard payroll first and manually adjust the employee's tax settings to exempt in their profile. Then, execute a second payroll run for the on-reserve hours.

Here's how:

1. Run payroll for the off-reserve hours.
2. Go to Payroll, then Employees.
3. Select the employee, then go to the Tax withholdings section and click Edit.
4. Check the boxes for the taxes that the on-reserve income is exempt from and Click Save.
5. Go to Payroll, then Employees.
6. Run payroll for the on-reserve hours.

Alternatively, if you prefer to process all hours in a single payroll run, you can set up a custom pay type. However, the available non-taxable item is Reimbursement. That said, I recommend checking with your accountant to determine which method best aligns with your business requirements.

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