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Create a non-taxable reimbursement payroll item

Learn how a non-taxable reimbursement payroll item can be created in QuickBooks Desktop payroll.

In QuickBooks Desktop Payroll, you can create a non-taxable reimbursement payroll item for things such as mileage, travel, or non-taxable insurance reimbursements. Here's how:

Add a new payroll item

The first thing you need to do is add a new payroll item.

  1. From Lists on the menu bar, select Payroll Item List.
  2. Select Payroll Item then select New.
  3. If using a U.S. version of QuickBooks only, select the Custom Setup option button. Then select Next.
  4. Select the Addition item type. Then select Next.

Set up the new item

Next, you need to set up the new item.

  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 don't report on tax forms. Then select Next.
  3. For amounts paid per mile/kilometer, select the Based on Quantity checkbox. Then select Next.
  4. Choose to calculate on net pay. Then select Next.
  5. Enter a Default Rate. Then select Finish.

Add the item to the employee's record

Finally, you need to add the item to the employee's record.

  1. From Employees on the menu bar, choose Employee Center.
  2. Double-click the employee's name.
  3. Go to the Payroll Info tab.
  4. Add the item from the drop-down list under Additions, Deductions, and Company Contributions.

When creating pay checks, the addition item will appear in the Other Payroll Items area of the Preview Paycheck screen. If the item is based on quantity, be sure to enter the appropriate amount in the Quantity column.

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