Tracking Payroll Expenses for Income Tax in QuickBooks

To report the payroll expenses accurately on your income tax forms, you need to set up a separate payroll subaccount for each type of expense that you report.

Step 1 – Go to the Lists menu and then click on the Chart of Accounts.

Step 2 – Click Account at the bottom of the list and click on the New button.

Step 3 – Click on the Type drop-down menu and select Expense.

Step 4 – Enter a name for the subaccount that will help you to recognize its purpose.

For example, if it is for tracking commission expenses, then name it ‘Commissions.’

Step 5 – Select the ‘Subaccount of’ checkbox, and then select Payroll Expenses.

Step 6 – Click on the Tax Line drop-down menu and select the tax line.

Step 7 – Record the new subaccount and then, click on OK or Click on the Next button  to set up the next subaccount.

Step 8 – Repeat the Steps 3 through 7 to set up any other payroll expense subaccounts that you need.

Step 9 – Assign the new payroll subaccounts to the appropriate payroll items:-

In the Payroll Item list, select the item. Click on the Payroll Item which is at the bottom of the list and click on Edit Payroll Item.

  • Click on the Next button. Click on the Expense account drop-down menu and select the payroll expense subaccount you set up.
  • Click on the Next button until you can click on the Finish button.

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