Reimburse employee expenses

What's a reimbursement?

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. (Industries that require extensive travel typically use nontaxable per diem payments instead of expense reimbursements.)

Because these payments aren't taxable, they don't appear on payroll tax or other tax reports, or on W-2 forms. They're also not included in the wage base used to calculate percentage-driven deductions such as 401k amounts. For guidelines on reimbursements, check the Employee business expense reimbursements section of IRS Publication 15, Circular E: Employer's Tax Guide .

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.

To add the Reimbursement 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 Reimbursement 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. Add an amount to the Recurring box if a fixed amount is reimbursed every payday.
  6. Click Done.

Next time you create a paycheck for the employee, the Reimbursement item appears in the Pay column. Enter the reimbursement amount to add to the employee's paycheck.

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.

See also

 


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