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Level 1

Negative taxes on employee paycheck

I copy payroll from our payroll company into Quickbooks employee payroll.  I have a paycheck that is a $90 reimbursement and then $90 going taxfree to the employees HSA.  Thus the payroll taxes are negative (with a $11 net payroll check) for both employee contribution and employer contribution.  Quickbooks won't allow a negative tax amount.  How do I enter this so the payroll is correct?  Any suggestions?

QuickBooks Team

Re: Negative taxes on employee paycheck

Thanks for choosing QuickBooks as your accounting tool, @Kroeh.


I'm here to answer your inquiry about entering negative tax amount.


Did you enter the payroll data from your company as YTD adjustments? If so, there isn't a need to enter the tax amounts with a negative sign. This is because taxes are automatically recognized by QuickBooks as deductions.


The same behavior should be applied when creating paychecks. The taxes will directly appear with negative amounts under the Employee Summary section.



If you're referring to something else, please let me know. You can provide a screenshot of the results you're getting or details on how you entered the reimbursement and HSA employee.


I'm looking forward to your response.

Level 1

Re: Negative taxes on employee paycheck

I'm sorry, I guess I didn't explain very well.  The taxes in this case are a negative deduction- therefore positive.  Quickbooks will not let me do this.

QuickBooks Team

Re: Negative taxes on employee paycheck

Hello @Kroeh,


You don't need to enter a negative amount for your paycheck.


It isn't necessary to input negative amounts as QuickBooks recognizes them as deductions, but I have a solution for you. You can override the amounts in your paychecks.


Here's how you can edit the amounts:

  1. Click on Employees from the menu bar.
  2. Select Pay Employees.
  3. Continue to run payroll.
  4. Click on the Pencil icon to edit paycheck.
  5. Click on Save & Close.

You can also create a non-taxable reimbursement payroll item. First, you'll need to add a new payroll item. You may follow these steps:

  1. Click on Lists from the menu bar, and choose Payroll Item List.
  2. Click on the Payroll Item button, choose New.
  3. Select the Custom setup button, then click on Next.
  4. Click on the Addition item type, then select Next.

Next, you need to set up the item. Here's how:

  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.
  3. Click on Next.
  4. For amounts paid per mile/kilometer, select the Based on Quantity checkbox. Then select Next.
  5. Choose to calculate on net pay. Then select Next.
  6. Enter a Default Rate. Then select Finish.

Once completed, you can now add the item to your employee's record. Here's how:

  1. Click on Employees from the menu bar.
  2. Select 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.

That's it! You can now successfully enter the reimbursement to your payroll. Please let me know if you have other questions.

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