Hi there,
Running a small business with QuickBooks Online means that you'll save tons of time with your bookkeeping needs. With the addition of payroll, you'll be able to take advantage of even more time-saving benefits. I'd be happy to explain which pay types are taxable and non-taxable if you're using QBO Payroll.
If your employees are paying for their mileage expenses, you'll want to issue a reimbursement rather than an allowance. Reimbursements are nontaxable payments to an employee used to repay business-related expenses that the employee has paid out-of-pocket.
Don't include expenses that have tax implications, such as moving expenses. Typically this includes expenses incurred for limited or regular business travel.
Because these payments aren't taxable, they don't appear on payroll tax or other tax reports. They're also not included in the wage base used to calculate percentage-driven deductions.
You can add multiple reimbursement pay types and keep the default name we provide or give them each a unique name. In addition to being available for this employee, the custom pay types will also be available when you add or edit your other employees.
For more information about the different pay types in QBO, take a look at this article: Supported pay types and deductions explained.
I hope this helps shed some light on this for you. If you have any other questions, please reach out to our tech support team for further assistance.
Cheers.
