Reimburse your employee

This article covers how to add nontaxable employee reimbursements to paychecks in QuickBooks Online Payroll. Reimbursements cover business expenses that employees paid out-of-pocket and aren't considered taxable income. These payments don't appear on payroll tax forms.

Authoritative guidance

For official guidelines on nontaxable reimbursements, refer to the Employee business expense reimbursements section of IRS Publication 15, Circular E—Employer's Tax Guide.

Step 1: Create a reimbursement item

Add a reimbursement pay type so you can add it to a paycheck.

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1. Follow this link to complete the steps in product
2. Select your employee.
3. From Pay types, select Start or Edit.
4. Scroll to the Additional pay types section and select Reimbursement.
5. If a reimbursement pay type already exists, you can add another one:
   • Select the dropdown in the Common pay types section.
   • Select + Another Reimbursement type.
6. Enter a default amount or leave it blank to enter the amount when running payroll.
7. Rename the pay type by selecting Edit ✎ next to Reimbursement.
8. Select Save.

Step 2: (Optional) Define accounting preferences

You can update accounting preferences to help ensure reimbursement amounts are posted to the correct account in your chart of accounts.

QuickBooks Online Payroll

For a better experience, open this article in QuickBooks Online. Launch side-by-side view

Learn how to set up the Payroll accounting preferences for the reimbursement pay type.

Step 3: Run payroll with a reimbursement amount

Now that you've set up the reimbursement item and checked your accounting preferences, you can add the reimbursement amount to your employee's paycheck.

For a better experience, open this article in QuickBooks Online. Launch side-by-side view

1. When you create a paycheck, find the Reimbursement field you set up.
2. Enter the amount for the reimbursement.
3. The paycheck total will include the reimbursement amount.

Note: QuickBooks Online Payroll doesn't support "reimbursement only" paycheck as taxes and deductions always impact checks. You'll process reimbursements along with your regular paychecks.