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How to add an allowance for expenses

SOLVEDby QuickBooks35Updated May 23, 2023

An allowance is a taxable payment to an employee that's separate from regular wages. It's typically paid with each payroll to cover job-related costs, such as uniforms or auto usage, and is taxable because it's not dependent upon actual receipts.

Note: Allowance amounts are not included in the pay base for calculation of percentage-driven deductions such as Registered Retirement Savings Plan (RRSP) amounts.

Here’s how to add the allowance pay type for an employee:

  1. Navigate to Payroll and select Employees (Take me there).
  2. Select the employee from the list
  3. Select Edit employee.
  4. Under How much do you pay the employee, select the pencil icon.
  5. Select the Allowance checkbox. Note: If the pay type is not in the Additional pay types list, select Even more ways to pay this employee to see more pay types, and select it from there.
  6. Optionally, enter a default amount to be paid each pay cheque. You can always change this amount when you run payroll.
  7. Select Done.

The next time you create a pay cheque for the employee the Allowance pay type appears in the Pay column.

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