Pay types: Reimbursement

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 set up a Reimbursements:

In "Employer On The Go" portal:

1. Set-up reimbursement item on an employee
   1. 1. Hover over "Employees" menu
      2. Select "Deductions" (truly this should say "adjustments" as reimbursements aren't deductions)
      3. Select "Add"
      4. Select "Employee ID" from dropdown
      5. In "Deduction" column, select "Reimbursement" item
      6. Select "Save"
      7. Repeat as necessary
2. Add "Deduction/Adjustment Over" option on "Enter Payroll" screen
   1. Hover over "Payroll"
   2. Select "Enter Payroll"
   3. On "Enter Payroll" page, select "Setup" button
   4. In "Earnings Code table", select "Deduction/Adjustment Over"
   5. Select "Save"
3. Use "Reimbursement" option on "Enter Payroll" screen:
   1. 1. In "Deduction ID" column, from drop-down on employee's row, select "Reimbursement" item
      2. Input reimbursement amount in "Deduction Amount" column
      3. Repeat as necessary
      4. Select "Save"

In "ManagePayroll" portal:

1. Go to the Employees tab.
2. Click an employee's name.
3. On the employee's overview page, look for the Pay section and click Edit.
4. Scroll down to the What additional ways do you pay? section and click to select the Reimbursement checkbox.
5. Click OK.

Next time you create a paycheck for the employee, the Reimbursement pay item appears. Simply enter the amount and our payroll service adds it to the paycheck.