Allowance for expenses

What's an allowance?

An allowance is a taxable payment to an employee that's separate from regular wages.

It's typically paid with each payroll to cover job-related costs, such as uniforms or auto usage, but it's taxable because it's not dependent upon actual receipts. Allowance amounts are not included in the pay base for calculation of percentage-driven deductions such as 401(k).

Add the Allowance pay type for an employee

  1. In the left navigation bar, click Employees.
  2. Click the employee's name, and then click Edit employee.
  3. Under How much do you pay this employee? click Add additional pay types if you haven't selected any other pay types, or click the pencil icon if you have.
  4. Select the Allowance checkbox. If the pay type is not in the Additional pay types list, click Even more ways to pay this employee to see more pay types, and select it from there.
  5. Optionally, enter a default amount to be paid each paycheck. You can always change this amount when you run payroll.
  6. Click Done.

The next time you create a paycheck for the employee, the Allowance pay type appears in the Pay column.

After you set up  a pay type for one employee, it shows up in the list, so it's easy to assign to other employees.

 


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