Reimbursements and expenses (for admins)
Admins can set up reimbursements for employees and contractors in Gusto and run reports on expenses paid and reimbursed.
Important reminders
Reimbursements and expense reimbursements are usually not taxed, and therefore are not typically reported as regular wages. Examples include:
Job-related travel expenses (not commuting)
Professional subscriptions, memberships, conferences, and training
Business tools and equipment
Professional license fees
Special scenarios:
Taxable fringe benefits (like reimbursement for a gym membership or cell phone plan) should also be added as fringe benefits for tax reporting purposes.
Educational assistance (like student loans or tuition discounts) up to $5,250 per year can be set up as tax-free reimbursements if qualifications are met.
Educational assistance over $5,250 per employee, per year should be paid to employees as a taxable fringe benefit. Learn how to set this up in Gusto. For more details, speak with an accountant.
Once you offer QSEHRA or ICHRA through a third party (such as Take Command Health), you can use the steps below to set up a reimbursement.
Expense reimbursements for non-US contractors are not supported.
Employees can learn how to submit reimbursement requests for expenses here.
Use the dropdowns below to learn more about a topic, or use CMD + F (or CTRL + F) to search for keywords throughout the article.
Heads up: If you have AutoPilot activated for your payroll, you’ll need to run payroll manually to add a one-time reimbursement and follow the instructions above, OR approve all expenses before your Autopilot runs.
In addition to admins being able to add expenses, employees can submit them on their own for approval.
In your web browser
To reimburse US employees during a regular payroll you run in your web browser:
Click the Pay section and select Run payroll.
Click Run payroll.
Next to your employee, click +Reimbursement.
Reimbursements must be a positive amount.
If you're paying this in a regular payroll, click into the "Reimbursement" column.
If you'd like to give more than one employee the same one-time reimbursement, use the bulk edit tool.
Enter the dollar amount you'd like to reimburse.
Add a description (optional).
Click Save.
Finish running payroll.
The reimbursement amount will be displayed as a separate line item on the paystub. If you'd like to leave a note about the reimbursement, add a personal note on the paystub.
In the Gusto mobile app
To reimburse a US employee during a regular payroll you run in the mobile app:
Open the Gusto mobile app and sign in.
To pay employees in a regular pay period, find the pay period and tap Run.
To pay employees outside the regular pay period, scroll down and tap See more options. Choose Run an off-cycle payroll.
Tap Run.
Scroll down to the employee you're reimbursing and tap Edit.
To add a reimbursement for multiple employees at once: Tap the checkbox next to each employee you're reimbursing. In the bottom-right corner, tap Actions. Choose One-time reimbursement. Add the amount and tap Update.
Scroll down to Reimbursments and select Add.
Tap Add a one-time reimbursment.
Add a description. This is how we'll label the reimbursement on their paystub.
Add the amount to reimburse on this payroll.
If you have more than one reimbursement to add for this person: Tap Add a one-time reimbursement again.
Tap Save.
Review the employee's pay details and tap Done.
Finish running payroll.
The reimbursement amount will be displayed as a separate line item on the paystub. To leave a note about the reimbursement, add a personal note on the paystub.
To reimburse US employees outside of a regular payroll, use an off-cycle payroll.
In your web browser
To run an off-cycle payroll with reimbursements in your web browser:
On step 1, for Why are you running this off-cycle payroll?, select Other.
Tell us who you’re paying, and enter hours and earnings (gross pay) or net pay for the Pay Type.
Enter the pay period the reimbursement is for, and select a pay date. The soonest available direct deposit date will show.
Complete the other advanced settings. For Reimbursement-only payrolls, they commonly:
Do not include deductions or contributions
Are non-taxable
Create the payroll and enter the reimbursement amount.
The reimbursement amount will be displayed as a separate line item on the paystub. To leave a note about the reimbursement, add a personal note on the paystub.
In the Gusto mobile app
To run an off-cycle payroll with reimbursements in the Gusto mobile app:
Open the Gusto mobile app and sign in.
In the Payroll tab, scroll down and tap See more options.
Choose Run an off-cycle payroll.
Tell us why you're running this payroll.
Under Who do you want to pay? tap the checkbox next to each employee you're including on this payroll. Tap Save.
Choose the time period the payment applies to.
Selct the pay date.
Add a name for the payroll.
Tap Continue.
Choose the settings for this payroll. Keep in mind that reimbursement-only payrolls commonly do not include deductions or contributions and are non-taxable. Contact your HR export if you're not sure what to choose.
To change any of the settings, tap Edit and make your selection.
Tap Create payroll.
If applicable, review the hours and earnings for each employee you've included on this payroll. Tap Edit to update anyone's details.
For each employee you're reimbursing, tap Edit next to their name.
To add a reimbursement for multiple employees at once: Tap the checkbox next to each employee you're reimbursing. In the bottom-right corner, tap Actions. Choose One-time reimbursement. Add the amount and tap Update.
Scroll down to Reimbursments and select Add.
Tap Add a one-time reimbursment.
Add a description. This is how we'll label the reimbursement on their paystub.
Add the amount to reimburse on this payroll.
If you have more than one reimbursement to add for this person: Tap Add a one-time reimbursement again.
Tap Save.
Review the employee's pay details and tap Done.
Finish running payroll.
The reimbursement amount will be displayed as a separate line item on the paystub. To leave a note about the reimbursement, add a personal note on the paystub.
A reimbursement pays a contractor back for money they already spent for your business. Reimbursements are not earnings and should not be included on a contractor’s 1099. Reimbursements are treated separately from contractor earnings because the contractor does not make a profit from them.
Reimbursements vs. earnings
Earnings are:
Payment for work the contractor performed
Reported on the contractor’s 1099
Reimbursements are:
Repay the contractor for business expenses
Not reported on the contractor’s 1099
When a payment counts as a reimbursement
A payment can be treated as a reimbursement only if the contractor:
Spent money on a real business expense, such as:
Travel (flights, hotels, gas)
Office supplies
Software or tools needed for the job
Gave you proof of the expense (like a receipt)
Returned any extra money you gave them
What should NOT be treated as a reimbursement
These payments are considered earnings, not reimbursements:
The contractor keeps the money without proof of spending
The payment is more than the actual expense
There are no receipts or records
If this happens, include the amount in the contractor’s regular payment so it's reported as compensation on their 1099.
How to reimburse US contractors in Gusto
To reimburse a US contractor, follow these steps:
Click Pay, then select Pay contractors.
In Pay domestic contractors, click Create payment.
Next to the contractor, click + Enter payment.
Select + Reimbursement and enter the amount. Reimbursements must be a positive amount.
Finish running the payment.
How reimbursements appear in Gusto
Once the payment is processed:
The reimbursement shows as a separate line item on the contractor’s paystub.
You can add a personal note on the paystub to explain the reimbursement.
Recurring reimbursements are added to the employee’s paycheck every pay period automatically and are only paid on regular payrolls.
At this time, recurring reimbursements for contractors are not supported—follow the steps above to give a one-time reimbursement when paying your employees.
In your web browser
Click the People section.
Click the employee's name.
From the Pay tab, find “Recurring reimbursements” and click Add.
Select a reimbursement type from the drop-down, or select Other reimbursement to create a new reimbursement type.
If you selected "Other reimbursement," enter the reimbursement name.
Example: Office lunches
Enter the reimbursement amount that will be added on each regular payroll.
Reimbursements must be a positive amount.
Click Save.
The next time you run payroll, this amount will appear in the reimbursement field. You can edit the amount if needed before processing the payroll.
Once processed, the amount will be a separate line item on your employee's paystub. You can also run a payroll journal report to review totals for all of your recurring reimbursements.
In the Gusto mobile app
Open the Gusto mobile app and sign in.
Go to People.
Select the employee's name.
Tap the
menu near the top-left of the screen.Select Pay.
Scroll down to Recurring reimbursements and select Add.
Choose a reimbursement type.
To create a new one, select Other reimbursement then add a name for it.
Enter the reimbursement amount that will be added on each regular payroll.
Reimbursements must be a positive amount.
Tap Save.
The next time you run payroll, this amount will appear in the reimbursement field. You can edit the amount if needed before processing the payroll.
Once processed, the amount will be a separate line item on your employee's paystub. You can also run a payroll journal report to review totals for all of your recurring reimbursements.
In your web browser
Click the People section.
Click the employee's name.
From the Pay tab, find “Recurring reimbursements” and click Edit next to the reimbursement you need to change.
The following can be edited:
The reimbursement type
The reimbursement amount
The reimbursement name—this is only available if you selected "Other reimbursement" when setting up the reimbursement.
Click Save.
The next time you run payroll, the update will appear in the reimbursement field. You can edit the amount if needed before processing the payroll.
Once processed, the amount will be seen as a separate line item on your employee's paystub. You can also run a payroll journal report to review totals for all of your recurring reimbursements.
In the Gusto mobile app
Open the Gusto mobile app and sign in.
Go to People.
Select the employee's name.
Tap the
menu near the top-left of the screen.Select Pay.
Scroll down to Recurring reimbursements. Find the one you're changing and tap Edit.
Update the type and amount.
If the type is Other reimbursment, you can also edit the name.
Tap Save.
The next time you run payroll, the update will appear in the reimbursement field. You can edit the amount if needed before processing the payroll.
Once processed, the amount will be seen as a separate line item on your employee's paystub. You can also run a payroll journal report to review totals for all of your recurring reimbursements.
In your web browser
Click the People section.
Click the employee's name.
From the Pay tab, find “Recurring reimbursements” and click Edit next to the reimbursement you need to change.
Click Delete this reimbursement.
In the Gusto mobile app
Open the Gusto mobile app and sign in.
Go to People.
Select the employee's name.
Tap the
menu near the top-left of the screen.Select Pay.
Scroll down to Recurring reimbursements. Find the one you're deleting and tap Edit.
Scroll down and select Delete this reimbursement.
Plus and Premium customers can reimburse employees for expenses using the Expenses feature. If you do not see this feature, you can upgrade your plan at any time or set up a one-time reimbursement.
Admins with the required permissions can add one-time expense reimbursements for employees, approve submitted expenses, or decline expense requests with a note.
Reminders
Expense reimbursements appear on regular, off-cycle, and bonus payrolls.
Managers can approve expenses—you'll just need to make sure they have the required permission to do so.
Expense reimbursements are not taxed, and therefore not reported as regular wages. If you’d like to set up a recurring expense reimbursement (rather than a one-time approval), follow these instructions.
Reimbursements submitted through the Expenses feature are displayed in the reimbursement line in the Payroll Journal report.
On paystubs, the full title of the expense is included.
The option to submit an expense and review expense history is removed after an employee's dismissal date.
Reimbursements can still be processed for dismissed team members by running an off-cycle payroll.
Expense reimbursements for non-US contractors are not supported.
You'll need to enable Expenses before your team can use this feature.
In your web browser
To turn on expenses from your web browser:
Go to Pay.
Click Expenses.
Select the Customization tab.
Click edit next to "Expenses" and toggle to Enabled.
This will only appear if you're on the Plus or Premium plan.
Click Save.
In the Gusto mobile app
To turn on expenses in the mobile app:
Open the Gusto mobile app and sign in.
In the top-right corner, tap the You icon.
Select Company.
Tap the
menu icon.Select Customization.
Find Expenses and tap Edit.
This only appears if you're on the Plus or Premium plan.
Select Enabled.
Tap Save.
After saving, tap More and select Expenses to access the feature. If you do not see it right away, close and reopen the app.
If you have AutoPilot activated for your payroll, you’ll need to run payroll manually to add a one-time reimbursement and follow the instructions above, or approve all expenses the day before your Autopilot runs.
In your web browser
Go to Pay.
Click Expenses.
Select an employee from the dropdown.
Enter a date for the expense.
Select the expense category.
Add a description.
Enter the dollar amount to be reimbursed.
Add a photo of the receipt or purchase confirmation being reimbursed in PDF, JPG, or PNG format (optional).
Click Save.
In the Gusto mobile app
Open the Gusto mobile app and sign in.
In the bottom-right corner, tap More.
Select Expenses.
Tap Add expense.
Select an employee from the dropdown.
Enter a date for the expense.
Select the expense category.
Add a description.
Enter the dollar amount to be reimbursed.
Add a photo of the receipt or purchase confirmation being reimbursed in PDF, JPG, or PNG format. The expense's amount, date, and description may be filled in automatically. Review the pre-filled details before saving.
Tap Save.
What happens next
Once submitted, all pending expenses (whether submitted by an admin or employee) appear on your Expenses home page until an admin approves them. If your employee submitted their expense through the Gusto mobile app, the amount, date, and description may have been automatically filled in from their receipt photo. Review these details before approving.
Approved expenses pay out on the next payroll as a separate line item on the team member's paystub. To leave a note about the expense reimbursement for your employee, add a personal note on the paystub.
Set up a reimbursement rate
In your web browser
Go to Pay.
Click Expenses.
Click Settings in the upper-right corner.
Select the Reimbursement rates tab.
Click Create new rate in the upper-right corner.
Enter a name for the rate and the dollar amount per mile to use.
Refer to the IRS guidance to determine the appropriate rate to use.
Click Save.
Repeat the process to set additional rates if applicable.
In the Gusto mobile app
Open the Gusto mobile app and sign in.
In the bottom-right corner, tap More.
Choose Expenses.
Near the top of the screen, tap More.
Select Settings.
Tap Reimbursement rates.
Select Add rate.
Enter a name for the rate and the dollar amount per mile to use.
Refer to the IRS guidance to determine the appropriate rate to use.
Tap Create rate.
If you have more rates to add, repeat these steps.
Submit a one-time mileage reimbursement for an employee
Go to Pay.
Click Expenses.
Select an employee from the dropdown.
Enter a date for the expense.
Select the Car and Mileage category.
Add a description.
Enter the mileage driven and select the reimbursement rate from the dropdown.
The total dollar amount will be automatically calculated.
Attach images of the odometer in PDF, JPG, or PNG format (optional).
Click Save.
In the Gusto mobile app
Open the Gusto mobile app and sign in.
In the bottom-right corner, tap More.
Select Expenses.
Tap Add expense.
Select an employee from the dropdown.
Enter a date for the expense.
For the category, select Car and Mileage.
Add a description.
Enter the dollar amount to be reimbursed.
Optional: Add a photo of the odometer in PDF, JPG, or PNG format.
Tap Save.
Employees can learn how to submit reimbursement requests for expenses here. You’ll receive an email when an expense is submitted.
In your web browser
Go to Pay.
Click Expenses.
Scroll to the expense you're looking for.
Under the "Actions" column on the far-right, click the three-dot action menu.
Select to:
Edit (if available)
Approve
Approved expenses will pay out on the next payroll, you’ll see the amount as a separate line item on the employee's paystub.
If you'd like to leave a note about the expense reimbursement for your employee, add a personal note on the paystub.
Reject
Leave a note about why you're rejecting the expense and click Submit.
Delete
This action cannot be undone—click Delete expense to confirm you want to delete it.
In the Gusto mobile app
Open the Gusto mobile app and sign in.
In the bottom-right corner, tap More.
Select Expenses.
By default, only expenses that need review are listed. To change which expenses are shown:
Tap the three dots icon near the top-right of the screen and select Filter.
For each expense you're reviewing, take a look at the details. Then tap the three dots icon in the top-right corner of the expense's card.:
Choose to:
Edit (if needed)
Approve. Approved expenses will pay out on the next payroll. You’ll see the amount as a separate line item on the employee's paystub. To leave a note about the expense reimbursement for your employee, add a personal note on the paystub.
Reject. Leave a note about why you're rejecting the expense and click Submit.
Delete. This cannot be undone.
To take an action on multiple expense at once:
Tap the checkbox next to each expense you want to manage. Near the top of the screen, tap Actions. Then select whether you're approving, rejecting, undoing approval, or deleting the selected expenses.
Add a custom expense category
Default expense categories include car and mileage, employee benefits, meals and entertainment, and more. You can also add custom categories.
In your web browser
Go to Pay.
Click Expenses.
Click Manage categories in the top-right corner.
Click +Add a new category.
Type in your new category in the popup screen.
Click Save.
In the Gusto mobile app
Open the Gusto mobile app and sign in.
In the bottom-right corner, tap More.
Choose Expenses.
Near the top of the screen, tap More.
Select Settings.
Tapp Add category.
Enter the category name.
Tap Save.
Edit a custom expense category
Follow the steps below to change the name of a custom expense category you've created.
In your web browser
Go to Pay.
Click Expenses.
Click Manage categories in the top-right corner.
In the list of "Custom categories", find the category you wish to edit.
Click the pencil icon.
Type in your new category name in the popup screen.
Click Save.
In the Gusto mobile app
Open the Gusto mobile app and sign in.
In the bottom-right corner, tap More.
Choose Expenses.
Near the top of the screen, tap More.
Select Settings.
Scroll to the category you're editing.
Tap the three dots icon next to the category name.
Tap Edit.
Enter the new name for the category.
Tap Save.
Delete a custom expense category
In your web browser
Go to Pay.
Click Expenses.
Click Manage categories.
In the list of "Custom categories", find the category you wish to remove.
Click the trash can icon.
Confirm your choice by clicking Delete.
In the Gusto mobile app
Open the Gusto mobile app and sign in.
In the bottom-right corner, tap More.
Select Expenses.
Near the top of the screen, tap More.
Select Settings.
Find the category you want to delete and tap the three dots icon.
If you do not see a three dots icon for that category, it's a default expense and cannot be deleted. Instead, you can turn the category off: Under Active, tap the toggle to disable it.
Tap Delete.
Tap Delete again to confirm your change.
Turn an expense category off (custom or default)
If you do not want team members to use a certain category, follow the steps below.
In your web browser
Go to Pay.
Click Expenses.
Click Categories.
Under Manage expense categories find the category you'd like to turn off. In the Active column, click the toggle to set it as active or inactive.
In the Gusto mobile app
Open the Gusto mobile app and sign in.
In the bottom-right corner, tap More.
Select Expenses.
Near the top of the screen, tap More.
Select Settings.
Scroll to the category you're editing.
Under Active, tap the toggle to turn that category off.
You can filter the list of expenses by category or by employee name.
Filter by category
On the expenses page, you can filter expenses by custom or default categories.
In your web browser
Go to Pay.
Click Expenses.
Click on the filter button.
In the popup, select the categories you want to filter.
Click Apply.
In the Gusto mobile app
Open the Gusto mobile app and sign in.
In the bottom-right corner, tap More.
Select Expenses.
Near the top-right of the screen, tap the three dots icon.
Select Filter.
Tap the checkbox next to each detail you want to include in the list of expenses.
Tap Apply.
Search by employee
In your web browser
Go to Pay.
Click Expenses.
Click in the Search people… text box.
Type in the partial name of the employee(s) you want to filter on.
Your list of expenses will now be filtered by the text.
In the Gusto mobile app
Open the Gusto mobile app and sign in.
In the bottom-right corner, tap More.
Select Expenses.
In the Search Expenses bar, enter the last name of the employee whose expenses you want to view.
You can perform bulk actions on a list of expenses. This works in a filtered or unfiltered list of expenses (see the Filter your expenses section of this article).
Select a group of expenses
In your web browser:
Go to Pay.
Click Expenses.
Select expenses in one of the following ways (clicking the Clear all link unselects all expenses).
Click the checkbox of the expenses you'd like to perform a bulk action on.
Click the top-level check box to select all on the current page.
Click the Select all link to select all expenses, including those not on the current page.
In the Gusto mobile app:
Open the Gusto mobile app and sign in.
In the bottom-right, tap More.
Tap Expenses.
Tap Select all, or tap the checkbox of the individual expenses you want to take action on.
Perform a bulk action
With your selected expense(s), click the Actions button on top to show the available bulk actions. Based on the status of the selected expenses, different bulk actions are available.
Needs Review
Approve: Approve expenses to be reimbursed during the next payroll.
Reject: Provide a rejection reason and reject expenses.
Edit: Update the category and/or description of expenses.
Delete: Permanently delete the expense.
Approved
Unapprove: Provide a reason the expense is unapproved and move the expense to the needs review state.
The activity log includes all events related to reviewing and approving expenses.
In your web browser
Go to Pay.
Click Expenses.
Click View activity log in the upper-right corner of the page.
To see an expense's details, find the link in the Details column.
In the Gusto mobile app
Open the Gusto mobile app and sign in.
In the bottom-right corner, tap More.
Select Expenses.
Near the top of the screen, tap More.
Select View activity log.
Activity log details
In the "Changed by" column, there are three possible types of value to indicate who performed the action:
An individual affiliated to your organization
An automated process in the Gusto system
Someone from the Gusto Care team
These are the actions recorded in the "Action" column:
Created expenses
Approved expenses
Unapproved expenses
Rejected expenses
Edited expenses
Paid expenses