Deduct expense reimbursement from paycheck

Hello and welcome to the QuickBooks Community, dibach.

Let me share some insights about the reimbursement pay type.

A reimbursement is a type of compensation paid to an employee as a repayment for an expense they have paid out of their own pocket. This pay type is considered non-taxable and will not appear on any of your payroll tax forms.

Taxability:

• FIT: Exempt
• SS: Exempt
• Med: Exempt
• FUTA: Exempt

How it’s reported on federal forms:

• 941: Doesn’t show up
• 940: Doesn’t show up
• W-2: Doesn’t show up

To learn more about the different pay types and how it affects the taxes and forms, please check out this article: Understand supported pay types and deductions in QuickBooks Online Payroll. 

For deducting the expense, let's make sure to set up the reimbursement item in the employee's setup:

1. Go to Payroll > Employees.
2. Select the employee’s name.
3. In the Pay types section, click on the pencil icon next to Pay.
4. Scroll to the How much do you pay section and click the pencil icon next to Additional pay types.
5. Put a check mark on the Reimbursement box. If there's an existing reimbursement pay type, you can add a new one in the Common pay types section dropdown. Just select + Another Reimbursement type to add new. You can add a default $ amount or leave it blank, and just enter the $ amount as you run payroll.
6. You can also rename this pay type. To rename, select pencil icon next to Reimbursement.
7. Hit Save.

I've got this sample screenshot for a visual reference: 

Once done, you're ready to run payroll including the reimbursement amount. For more information about the process, you can check out this guide: Reimburse your employee.

In addition, check out this link to help manage your other pay types in QuickBooks: Add or change pay types in Online Payroll.

Please stay in touch with me here if you have any additional questions about the reimbursement pay type or need help managing your payroll account. I'll be around to give steps to help you out.

Can you enter a negative reimbursement?

Thank you for coming back in this thread, @dibach. I'm here to help you get on the right track towards recording a company’s reimbursement.

You're on the right track on creating an expense transaction to reimburse your employee's business-related expenses. However, we’re unable to enter a negative amount to it.

To compensate your employees, you have two options. If you wish to pay them on the same day as the transaction, create an expense transaction and select a liability account. This way, the company owes you for the expense as payroll item posted to that account will zero it out.

Otherwise, you can create a journal entry for it if you want to record the expense first and pay it later. For more guidance, I suggest you follow the steps outlined by my colleague above.

As for the taxes and accounts affected, I recommend you consult your accountant to make sure you're recording it correctly.

Should you have any follow-up questions or concerns, don't hesitate to post again here in the Community or leave a comment on this thread. Take care and have a good one.

If you over reimbursed your employee through payroll how would you deducted the over reimbursed amount on the next payroll?

Hello there, WHY ARE YOU MAKING ME DO THIS.

Thanks for joining this conversation. Allow me to chime in and provide information about deducting an over-reimbursed amount to your employee in QuickBooks Online (QBO).

You can set up a deduction payroll item and add it to the next payroll of the employee in question. Here's how:

1. In QBO, go to the Payroll menu at the left pane, then Employees.
2. Choose the employee in question.
3. From Deductions & contributions, select Start or Edit.
4. From the Deduction/contribution ▼ dropdown, click + Add deduction/contribution.
5. Pick a Deduction type and Type from the small arrow icon, then enter a name(appears on a paycheck).
6. Select whether you want the deduction to be calculated as a Flat amount or a Percentage of gross pay. Then enter the amount or percentage. 
7. Hit Save, then Done to complete.

To know more about setting up a deduction item in QBO, consider checking out this article: Set up, change, or delete employee-paid payroll deductions.

For more information about managing employee reimbursements in QBO, you can refer to this article: Reimburse an employee.

I also recommend visiting our website for more tips and other resources you can use in the future: Self-help articles.

Let me know if you have more questions about payroll or anything else in the comment below. I'll be more than happy to assist. Take care.