Payroll Reimbursements - Gross Pay vs Net Pay

Thanks for dropping by the Community, celestew210. 

In QuickBooks Online (QBO), payroll wages will be posted on the expense account you've selected in the Payroll Settings. You can review it to check if you've assigned the correct account.

Here's how:

1. In QBO, go to the Gear icon at the top right to get to the Payroll Settings.
2. Click the Preferences tab at the top.
3. In the Wage Expense Accounts section, ensure you've chosen the correct Wage Account in the drop-down.
4. Review the other necessary information.
5. Hit OK to save.

For more insight about managing your current payroll preferences in QBO, consider checking out this article: Payroll accounting preferences.

Please let me know if you have any additional concerns or issues by leaving a comment in this thread. I'm always here to answer them. Have a great day!

Unfortunately, I don't have these same options.  I can go to the gear - payroll settings - preferences, then my options are different.

The other side of the problem - these reimbursement are showing as part of gross wages, which is incorrect.  They are not gross wages and will be showing incorrectly on W-2's.  How do we get adjust reimbursements to show as 'other pay' or addition to net pay, instead of gross?

Hey there, @celestew210. 

I appreciate you coming back and letting us know more details about your issue. 

Since my colleague's steps didn't work for you, I suggest contacting our Customer Support Team so they can review your account with you. Here's how: 

1. Go to the Help icon in the top right-hand corner. 
2. Click the Contact Us button. 
3. Give a brief description of the problem and hit Let's talk. 
4. Scroll down and pick to Get a callback. 

It's that easy! 

Keep us updated on how the call goes. It's my priority that you're able to do payroll reimbursements. Take care! 

Same issue here. I run a report to use for our state retirement plan and it always includes gym membership reimbursements and cell phone reimbursements as gross income. When setting up the reimbursement it indicates that it will be treated as a reimbursement but it never has. It shows up in gross pay on paychecks as well. This is an issue that needs to be fixed.

Did anyone ever get resolution on this? I have the same issue where simple employee expense reimbursement is showing up on payroll reports as part of gross pay.  Non-taxable reimbursements should not be part of Gross Pay.  

Good day, mark_g.

Yes, you are correct. Employee reimbursements are non-taxable. The reimbursement amount you paid to employees is included in their gross pay but not reported as Taxable Income. Therefore, no tax incur because this payment doesn't appear on any payroll tax forms.

Additionally, the amount is added to the gross figure in the payroll report or paycheck to balance what your employee received. Please refer to the Employee business expense reimbursements section of the IRS Publication 15, Circular E - Employer Tax Guide for more details.

I've also included the following information to help you with tax payment and form filing in QuickBooks Online: Pay and file payroll taxes and forms in Online Payroll.

You're welcome to post again if you need further assistance reimbursing your employee. I'll be around to assist you.

From everything I've read, it is true that reimbursements need to be included in 'Gross Pay' if you do not have an accountable reimbursement plan.  But, we DO have an accountable reimbursement plan.  Why is there no option in QuickBooks online to have 'Net Reimbursements'!  This should NOT increase their Gross Wages.  Help!

QuickBooks Desktop made this allowance, why not Online?

Hello there, @ChineseChickn23.

I understand that having net reimbursement is essential for your business. Let me route you to the best support that can help you with this matter.

I recommend reaching out to our Customer Support team. They can provide you with detailed information regarding your concern. You can reach them by going to the Help icon at the top right of the account. Follow the steps below:

1. Sign in to your QuickBooks Online company.
2. Select Help (?).
3. Select either of these tabs:

• Assistant tab and select Talk to a human.
• Search tab and click on Contact Us to connect with a support expert.

Additionally, I've added this helpful article as your reference in running payroll reports in QBO: Run payroll reports. 

Come back to this post if you have other concerns about payroll reimbursement in QBO. I'll be here to assist you.

Hi,

Thank you so much for you reply and for routing me to Customer Service Support.  I was on the phone with them for hours last week about this issue and they offered no alternative besides running this through as "Gross Wages."  It seems my only option is to avoid running reimbursements through payroll and having it ran through accounts payable and cutting separate checks to accomplish what I need to do.  That is sad because it means more time and work.  

I truly hope that QuickBooks Online provides an alternative to this in the future as it is definitely an areas in which it is lacking.  Thank you for your support though!

Is this what you've been doing then, separate checks? Or did you figure out a way to include on the paycheck correctly? I'm in the same boat right now and it seems like separate checks will need to be done unfortunately.

Hi! Yes, that is what we have been doing.  I checked with my accountant to verify, and she assured me that our employee reimbursements should not be listed in Gross Pay.  She also directed me to cut separate paper checks for the employee reimbursements.  I just set up a policy that any reimbursement receipt I receive prior to the 10th of the month will be reimbursed via paper check by the last day of the month.  Receipts received after the 10th will be reimbursed the following month.  That way, I only have to cut the reimbursement checks once a month.

The employees are absolutely fine with this, but it definitely creates more work administratively.  I'm so sorry you're in the same boat!

Thanks for the quick response! Ah, what a hassle...