Reimbursements allow you to pay employees back for out-of-pocket expenses — such as mileage, phone plans, uniforms, or travel costs — directly through payroll. You can add one-off reimbursements to individual pay stubs or set up recurring reimbursements that automatically apply every pay period.
What's covered in this guide?
How reimbursements work
There are two ways to reimburse employees through payroll:
One-off reimbursements: Manually added to a single pay stub for a specific expense.
Recurring reimbursements: Set up once on the employee's profile and automatically included on every regular pay run going forward.
In both cases, the reimbursement amount is added to the employee's net pay on top of their regular earnings.
Tax Treatment
Reimbursements are not taxable. They are not included in the employee's gross wages and are not subject to federal income tax, Social Security, Medicare, or state taxes. This is the correct treatment for most business expense reimbursements under an accountable plan (where the employee has a business reason for the expense).
If a reimbursement does not meet accountable plan requirements — for example, a flat stipend that is not tied to actual expenses — it may need to be treated as taxable income. In that case, the employee should be paid via an Earnings Type rather than a reimbursement.
Setting up recurring reimbursements
Recurring reimbursements are configured on the employee's profile. Once set up, they are automatically added to each regular pay run — no manual entry needed each pay period.
Steps
Navigate to the employee's profile.
Go to the Payroll tab.
Find the Recurring Reimbursements section.
Click Add to create a new recurring reimbursement.
Fill in the following fields:
Name: A descriptive label for the reimbursement (e.g., "Phone Allowance", "Mileage Stipend"). Each name must be unique per employee.
Amount: The fixed dollar amount to reimburse each pay period. Must be greater than zero.
Account: The general ledger account to record the reimbursement against.
Save the template.
The reimbursement will be automatically applied to the employee's next regular pay run and every regular pay run after that.
Managing Recurring Reimbursements
Edit: Click on an existing recurring reimbursement to change its name, amount, or account. Changes take effect on the next draft pay run. Any draft pay stubs for the employee will be recalculated automatically.
Delete: Archive a recurring reimbursement to stop it from being applied to future pay runs. Any lines already on draft pay stub from this template will be removed automatically. Posted pay stubs are not affected.
When Recurring Reimbursements Are Skipped
Recurring reimbursements are only applied to regular pay runs. They are automatically skipped for out-of-cycle pay runs. Since these are for specific one-off payments, recurring reimbursements are not included.
If you need to include a reimbursement on an out-of-cycle pay run, add it manually to the pay stub (see below).
Adding a one-off reimbursement to a pay stub
You can manually add a reimbursement to any individual pay stub while the pay run is in Draft status.
Steps
Navigate to the pay run and open the employee's pay stub.
Scroll to the Reimbursements section.
Click the Add button.
Fill in the following fields:
Amount: The reimbursement amount.
Reason: A description of what the reimbursement is for (e.g., "Hotel stay - Chicago conference").
Account: The general ledger account to post against.
The reimbursement will be included when the pay run is posted.
Manually added reimbursements are tagged as Manual Adjustment on the pay stub so you can distinguish them from template-generated lines.
Editing or Removing Lines on a Pay stub
While the pay run is in Draft status, you can:
Edit the amount, reason, or account of any reimbursement line.
Delete any reimbursement line from the pay stub.
Once the pay run is posted, reimbursement lines can no longer be changed.
Note: If you manually edit a line that was generated from a recurring template, it becomes a manual adjustment. This means your manual edit will not be overridden by additional template or pay stub changes.
How reimbursements appear on pay stubs
Reimbursements appear in a dedicated Reimbursements section on the pay stub, separate from earnings, deductions, and taxes. Each line shows:
The reimbursement reason or template name
The amount
Whether it's a manual adjustment
The reimbursement amount increases the employee's net pay without changing the gross pay or tax withholding lines.
Reimbursements from HR forms
If your organization uses HR forms for expense reporting, reimbursements can also be created automatically from submitted form responses. When an employee submits an expense form before the pay run end date, the reimbursement is added to their pay stub with a link back to the original form submission for easy reference.
Importing reimbursements
For bulk processing, reimbursements can be imported via the payroll import/export tool. Navigate to Payroll -> Payroll Settings -> Import / Export. You can click on Pay Stub Reimbursement Lines for a sample file. The import file should include:
Account: The GL account name
Amount: The reimbursement amount
Reason: A description
Be sure you have a draft pay run already set up. Then in the Import section, select Pay Stub Reimbursement Lines and upload your file. Those reimbursements will be included in your draft pay run.
Important reminders
Non-taxable. Most reimbursements should remain non-taxable. If your reimbursement should be taxed, set it up as an Earnings Type instead. A reimbursement is taxable if it does not qualify as a business expense reimbursement under IRS guidelines.
Recurring reimbursements are fixed amounts. Unlike deductions or contributions, recurring reimbursements do not support percentage-based calculations — they are always a set dollar amount per pay period.
One name per employee. Each recurring reimbursement must have a unique name for a given employee. This prevents duplicate templates from being created accidentally.
No impact on W-2s. Reimbursements do not appear on the employee's W-2.
General ledger. Reimbursements are posted to a "Reimbursements" account by default, but you can assign a different GL account on each template or individual line for more granular tracking. See the Journal Setup help guide for more information.
Year-to-date tracking. Reimbursements are tracked on a year-to-date basis per employee and can be viewed on the pay stub.