Reimbursements and taxes
Track employee-paid household expenses clearly, keep records organized, and understand how reimbursements differ from wages.
- Separate from wages
- Receipts stay organized
- You still file taxes yourself
1. What counts as a reimbursement?
Reimbursements cover reasonable household expenses your employee pays out of pocket while working for you.
- Mileage
- Activity fees
- Groceries or supplies
- Work-related purchases
- Parking or tolls
- Other approved household expenses
2. How Sadie handles reimbursements
- 1Submit request
Employee submits expenses with details and receipts.
- 2Review and approve
You review and approve what's reasonable.
- 3Keep the record
Sadie tracks and organizes approved reimbursements.
3. Reimbursements are usually separate from wages
When a request is approved, Sadie keeps reimbursements separately identified in your records.
4. Are reimbursements taxable?
Proper reimbursements are often treated differently than wages. But if an expense isn't reasonable, adequately documented, or doesn't qualify, it may be taxable to your employee. You still file taxes yourself.
5. Keep receipts when you can
Receipts help show that expenses are reasonable and work-related. Encourage your employee to attach them to requests.
- Take a clear photo
- Include date and amount
- Save digital or paper copies
Do reimbursements count as wages?
A true reimbursement — you paid them back for a documented household expense — is usually not wages. Sadie keeps reimbursements separately identified from payday wages. If an expense isn't reasonable or doesn't qualify, it may be taxable. That's not tax advice.
Should I keep receipts?
Yes. Receipts help show that expenses are reasonable and work-related. Attach a photo or PDF to the reimbursement request in Sadie when you can, and keep a copy yourself.
Does Sadie pay reimbursements automatically?
No. We never move money. Approved reimbursements can appear on a payday as a reminder to send — they are not added to wages or tax math. You send the reimbursement yourself, then mark it paid on Reimbursements.
Are all reimbursements tax-free?
No. Proper, documented, reasonable reimbursements are often treated differently than wages. If an expense isn't reasonable, adequately documented, or doesn't qualify, it may be taxable to your employee. Estimates in Sadie aren't a substitute for a licensed tax professional.
Does Sadie file anything for me?
No. Sadie calculates your numbers and gives you the actual W-2 and W-3 forms, filled in and ready to download from Tax Center. For 2026 Schedule H, we fill a line-by-line worksheet from your paydays — the IRS's official 2026 form unlocks when they publish it. You still sign, send, and file everything with the IRS and your state yourself.
You still send payment and file taxes yourself.