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dibach
May 25, 2022
Question

Deduct expense reimbursement from paycheck

  • May 25, 2022
  • 1 reply
  • 0 views

We accidentally duplicated some employee expense reimbursements (which are handled outside of Quickbooks) and I want to deduct money from paychecks to reimburse the company.  I'm worried about affecting payroll and taxes though.  We process checks outside of Quickbooks as well, so if I run payroll without the deductions and then process the actual paychecks for less money the banking transaction will won't match.  Is there a way to enter a credit to match up the imbalance between checking and payroll?

1 reply

RenjolynC
RenjolynC
May 25, 2022

Hello and welcome to the QuickBooks Community, dibach.

 

Let me share some insights about the reimbursement pay type.

 

A reimbursement is a type of compensation paid to an employee as a repayment for an expense they have paid out of their own pocket. This pay type is considered non-taxable and will not appear on any of your payroll tax forms.

 

Taxability:

 

  • FIT: Exempt
  • SS: Exempt
  • Med: Exempt
  • FUTA: Exempt

 

How it’s reported on federal forms:

 

  • 941: Doesn’t show up
  • 940: Doesn’t show up
  • W-2: Doesn’t show up

 

To learn more about the different pay types and how it affects the taxes and forms, please check out this article: Understand supported pay types and deductions in QuickBooks Online Payroll. 

 

For deducting the expense, let's make sure to set up the reimbursement item in the employee's setup:

 

  1. Go to Payroll > Employees.
  2. Select the employee’s name.
  3. In the Pay types section, click on the pencil icon next to Pay.
  4. Scroll to the How much do you pay section and click the pencil icon next to Additional pay types.
  5. Put a check mark on the Reimbursement box. If there's an existing reimbursement pay type, you can add a new one in the Common pay types section dropdown. Just select + Another Reimbursement type to add new. You can add a default $ amount or leave it blank, and just enter the $ amount as you run payroll.
  6. You can also rename this pay type. To rename, select pencil icon next to Reimbursement.
  7. Hit Save.

 

I've got this sample screenshot for a visual reference: 

 

 

Once done, you're ready to run payroll including the reimbursement amount. For more information about the process, you can check out this guide: Reimburse your employee.

 

In addition, check out this link to help manage your other pay types in QuickBooks: Add or change pay types in Online Payroll.

 

Please stay in touch with me here if you have any additional questions about the reimbursement pay type or need help managing your payroll account. I'll be around to give steps to help you out.

D
dibachAuthor
May 25, 2022

Can you enter a negative reimbursement?

J
JamaicaA
May 25, 2022

Thank you for coming back in this thread, @dibach. I'm here to help you get on the right track towards recording a company’s reimbursement.

 

You're on the right track on creating an expense transaction to reimburse your employee's business-related expenses. However, we’re unable to enter a negative amount to it.

 

To compensate your employees, you have two options. If you wish to pay them on the same day as the transaction, create an expense transaction and select a liability account. This way, the company owes you for the expense as payroll item posted to that account will zero it out.

 

Otherwise, you can create a journal entry for it if you want to record the expense first and pay it later. For more guidance, I suggest you follow the steps outlined by my colleague above.

 

As for the taxes and accounts affected, I recommend you consult your accountant to make sure you're recording it correctly.

 

Should you have any follow-up questions or concerns, don't hesitate to post again here in the Community or leave a comment on this thread. Take care and have a good one.

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