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September 15, 2023
Question

How do I make loans to employees in regards to "pay types". I don't want to take out taxes or report on W2 because the loan will be repaid.

  • September 15, 2023
  • 1 reply
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I am using Online Payroll

1 reply

September 15, 2023

Hello and thank you for choosing Online Payroll, arantacres. I understand that you're looking to  make loans to your employees without tax deductions or W2 reporting, and I'm here to help you with that. 

 

You can make loans to employees through issuing a check, allowing you to avoid tax deductions or reporting it on their W2 forms. Here's how you could do it:

 

  1. Navigate to the + New menu and choose Check
  2. In the Payee ▼ dropdown, pick the recipient you wish to address the check to. 
  3. From the Bank Account ▼ dropdown, select the account from which you want to draw the funds.
  4.  Complete the remaining fields as required.

 

To find information on how to create a check in QuickBooks Online, please refer to this article: Create and record checks in QuickBooks Online.

 

Then,establish a repayment payroll item:

 

  1. Go to the Payroll menu and choose Employees.
  2. Pick the specific employee.
  3. Under Deductions & Contributions, click on Start or Edit.
  4. Select the option to + Add Deduction/Contribution.

 

Finally, you can refer to this article for guidance on how to mark your employee's Federal or State Withholding as exempt: Set your employee's Federal or State Withholding (Income Tax) status as exempt.

 

If you have any more questions, please don't hesitate to reach out to me. I'm here to help you manage your finances seamlessly and efficiently. Take care and stay safe.