Employee Reimbursement via Direct Deposit

THANK YOU!!! I was on the phone with support for 30 mins and they had no idea. I appreciate the step by step!!

You're very welcome. Glad I was able to help!

I understand this answer, but how does this record the expense side of the reimbursement?  For example, debit travel expense account and credit employee reimbursements?

Greetings, @Keryn.

Thank you for joining the QuickBooks Community. I'm here to share some information about how reimbursement is posted in the QuickBooks Online Payroll (QBOP).

When you create a paycheck, make a tax payment or create a deduction, the transactions are posted to the default Expense and Liability accounts created by the system. You can find the current payroll preferences by following the steps below:

1. At the top right, click the Gear icon.
2. Select Payroll Settings.
3. At the top, select Preferences.
4. Select Accounting Preferences.

If you wish to view the current accounts for your reimbursement and wages, just go to the Wage Expense Accounts section, then select the I use different accounts for different groups of employees radio button.

If you wish to change the current preferences, here's how:

1. In the Accounting Preferences window, update the posting of the transactions you want to change.
2. Click OK.

For additional reference about the payroll settings, you can also check the articles below:

• Payroll accounting preferences

• Set up Payroll account preferences

Let me know if you have any other questions about reimbursement. I'll be happy to help you out.

If you pay the reimbursement through the payroll section it does not consider it a wage? Also are you able to categorize what the reimbursement was for? For example for supplies etc.

It won’t tax the reimbursement, but the category question is a good one. Still trying to figure that piece out since it buckets it into “reimbursements”. 

Is there a way to run a reimbursement without doing the actual salary/wages? I am not seeing a way to remove the wage. Thanks!

Good day, michelle-mangen.

Welcome to the Online Community. I’d be glad to help run a reimbursement without showing the actual salary/wages.

When creating a reimbursement for your employee, you have to manually adjust the salary amount, so it won’t show in the paycheck. I’ll walk you through the steps:

1. Go to Workers on the left panel.
2. Select Employees, and choose the employee you’re working on.
3. Click on the Run payroll tab, then select the pay schedule and choose Continue.
4. In the Run Payroll page, click the employee's salary amount to open the salary calculator.
5. Select Skip salary this time only, and click on Apply.
6. Enter the amount in the Reimbursement column.
7. Choose Preview payroll.
8. Click on the Submit payroll button, and choose Finish payroll.

I added a link with detailed information on how to edit salary amount on a paycheck.

That’s it. The resolution steps will help you create a paycheck that only shows the reimbursement amount.

Don’t hesitate to reach out back to me if you have questions about payroll. I’m always ready to lend a helping hand. Enjoy your day.

Thanks so much!

Hello again, michelle-mangen.

I appreciate you for letting us know that the steps provided by my colleague @Rasa-LilaM works. In case you need assistance or if you have additional questions with using the QuickBooks product, let me know. Our team is always around for you.

Thanks for coming to the Community, I'll keep an eye out for your response. 

How do you do this same exercise in the Desktop version of Quickbooks?

Hi there,

I'm answering the question regarding how to handle the proper expense accounts when the payroll entry will record the item as Reimbursements.

I just use a journal entry for this. When I get the receipt from the employee, I create a new journal entry. On the first line of the entry, I credit the Reimbursements account for the amount of the receipt. One the second line, I debit the proper expense account (for example, Parking). In attachments, I attach a scan of the receipt. Then I'm done until payday.

On payday, I pull up a QuickReport of the Reimbursements account, in order to see what reimbursements I owe. On the employee's paycheck, I enter the amount to be reimbursed (just as described in the answer that's already listed.)

Now, if you pull up a report of the Reimbursements account, you'll see negative amounts for the journal entries and positive amounts for the paycheck reimbursements, so that after payroll you should have a zero total in the Reimbursements Account, telling you that you're all paid up.

Hopefully this was clear enough to be of help - it took me a while to figure it out, but I've been doing it this way for a couple of years now and it works great!

I've reimbursed employees on their payroll for their expense reports using the Additional Pay "Expense Reimbursements".  How do I then note in QBonline that the expense reports have been paid?  I assume I use "Mark for Payment" but how do I note that it was already paid through payroll? Thanks.

Thank you for this.  This is the piece of the puzzle regarding employee reimbursements that I have not found addressed in any other answer:  Not how to pay the employee back, but how to record the expense in the first place!

Hi Nira P,

Recording your employee reimbursement won't mess up your payroll dates. You can use the same payroll schedule and include the reimbursement for reporting purposes.

You can read this article for more details: How to reimburse an employee.

You might also want to visit our page for future reference: Employees and payroll taxes.

Let me know if you need anything else. I'd be around to help.

I recently requested a reimbursement for office supplies. When I got the paycheck, the office supplies reimbursement is listed under "deductions." That doesn't seem right to me but our office manager assures me it was done correctly. Under "DEDUCTIONS"  there are the following three line items:

Thanks for sharing the details with me, @snorkle357.

The reimbursement is added as non-taxable addition. You'll want your office manager to create a non-taxable reimbursement payroll item. Here are the steps that you can show to your office manager on how to do it in your QuickBooks Desktop (QBDT).

To add a payroll item:

1. Go to the Lists menu
2. Select the Payroll Item List.
3. Click the Payroll Item button and select New.
4. Select the Custom Setup option button and then Next.
5. Choose the Addition item type and simply select Next.

Then you need to set up a 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 and select Next.
3. For amounts paid per mile/kilometer, select the Based on Quantity checkbox and click Next.
4. Then calculate the net pay and select Next.
5. Enter a Default Rate and click Finish.

Lastly, add the item to the employee's record. Here's how to do it:

1. Go to the Employees menu
2. Select the Employee Center.
3. Double-click the employee's name.
4. Go to the Payroll Info tab.
5. Add the item from the drop-down list under Additions, Deductions, and Company Contributions.

Furthermore, here's an article you can check for more details: Create a non-taxable reimbursement payroll item

I also recommend consulting with your accountant for guidance in choosing the right accounts in recording this. This way, we'll ensure the accuracy of your books.

Additionally, do visit our Help articles page for reference. From there, you can read useful articles that can guide you in managing your QBDT effectively.

You can always get back to me if there's anything else you need help with. I'll be around to help you. Take care and stay safe!

This method doesn't work for Auto-Payroll in QBO.  There is no way to add the expense line item since there are not any Scheduled Pay Runs available to add the line item too.  Assuming I already have the expense captured, I just need to know how to add the expense reimbursement to the employee's paycheck. How do we add a one-time reimbursement expense to an employee Pay Run if we are using Auto Payroll?

I can provide some information about adding an expense using auto payroll, maven1129.

You may need to pause Auto Payroll for a period and pay your employee manually to add an expense reimbursement. 

Here's how:

1. Click on Run Payroll and choose to Run payroll manually
2. Set the date, pay schedule, and edit any pay items for this payroll to add this expense reimbursement. 
3. Choose Preview and then Submit.

You can check this article for more information on how to set up and run your payroll: Turn on and manage your Auto Payroll.

Let me know if there's anything that you need in the reply section below. Keep safe and have a wonderful day!

I followed the steps and am still getting this error message because it reduced the employees "wages" to 0 even though there is an amount in the reimbursement column

"Net pay must be greater than 0. To pay Zxxxx Fxxxxx, increase the pay or decrease the deductions. To exclude Zach from this payroll run, clear the checkbox."