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QuickBooks Team

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Glad to see Hello there, @Linzee.


I’m here to help walk you through record an expense transaction taken out from your employee’s paycheck.


To start with, when setting up the deduction item, its liability account should be posted under any “expense account”. It can also be posted to the expense account where you track the purchases made out of payroll. That way you can just pay the bill when it comes in. Then, the “net“ amount in the expenses account is the amount you have paid, or the item purchased, less the amounts recovered from Employee deductions. 


Here’s how:

  1. Create a deduction Payroll Item (Make sure the Tax Tracking is None).
    1. Click the Lists menu.
    2. Choose Payroll Item List.
    3. Select the Payroll Item drop-down button, then click New
    4. Choose Custom Setup, then click Next.
    5. Follow the on-screen instructions on the corresponding pages:
      • Payroll item type: Select Deduction.
      • Name used in paychecks and payroll reports: Enter a name for the deduction.
      • Agency for employee-paid liability: Leave the Agency Name and Agency Identification Number fields blank. Also, QuickBooks will Auto-fill the Liability account field for you.
      • Tax tracking type: Select None if this is a non-taxable deduction. If it is, then select the appropriate type.
      • Taxes: Just click Next.
      • Calculate based on quantity: If this isn’t based on quantity and hours, then choose Neither.
      • Gross vs. net: Select net pay to ensure that this won’t affect the gross wages that’ll appear on your forms.
      • Default rate and limit: You can leave the Rate and Limit fields blank.
    6. Click Finish.
  2. Add it to the Employee Record.
    1. Go to Employees.
    2. Choose Employee Center.
    3. Double-click on the employee’s name.
    4. Select Payroll Info tab.
    5. Go to the AdditionsDeductions, and Company Contributions section.
    6. Enter the deduction under the Item Name column.
      Click OK.
  3. Enter the deduction amount.
  4. Include the deduction item in creating the employee’s paycheck.

If you need further assistance with the steps above, I’d recommend reaching out to our Customer Care Team. A specialist would be able to further help you via secured remote access session.


Here’s how to contact us:

  1. Go to: 
  2. Choose your QuickBooks Product.
  3. Select Payroll.
  4. Choose your type of Payroll Subscription.
  5. Click Payroll.
  6. Click on the View Contact Info button to see the support number.

Please don’t hesitate to click the Reply button if you have other questions about managing your expense transactions. I’m always here to lend a hand.

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