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We made an interest-free loan to an employee. The IRS requires that the interest that would have been charged to the employee (the "forgone interest" - equal to the loaned amount multiplied by the Applicable Federal Rate) be treated as taxable income to the employee.
How do I record the value of this forgone interest in QuickBooks so that the employee's W2 will reflect this amount as income to the employee? Should I use a Company Contribution payroll item?
Solved! Go to Solution.
I would use an Other Income item in payroll
I would use an Other Income item in payroll
Yes, I ended up creating a payroll item for the forgone interest and had it hit compensation expense.
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