> ## Documentation Index
> Fetch the complete documentation index at: https://help.trykarat.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Marking payments as reimbursements

> Classify Karat Payments as reimbursements to exclude them from 1099-NEC totals and tax thresholds, via the send form, bulk CSV, or row menu.

You can classify a payment as a reimbursement so it's excluded from 1099-NEC
totals and tax-collection thresholds. Use this when you're paying someone back
for expenses they incurred on your behalf rather than paying them for services.

## What counts as a reimbursement

A reimbursement is a payment that repays a recipient for out-of-pocket costs —
for example, travel expenses, supplies, or other business expenses they paid for
on your behalf. Because reimbursements aren't taxable income to the recipient,
they shouldn't be reported on a 1099-NEC.

You're responsible for deciding whether a payment qualifies as a reimbursement.
If you're unsure, consult your tax advisor.

## How reimbursements affect 1099-NEC totals

When a payment is marked as a reimbursement:

* It displays a **Reimbursement** pill on the payment row.
* Its amount is excluded from the recipient's 1099-NEC aggregation.
* Its amount is excluded from tax-collection thresholds that trigger W-9 or
  W-8 requests.
* It's flagged in payment exports with a **Reimbursement** column set to
  **Yes**.

Non-reimbursement payments continue to count toward 1099-NEC totals as usual.

## Marking an individual payment when you send it

When you create a single payment, you can mark it as a reimbursement before
submitting:

1. Go to [Payments](https://app.trykarat.com/banking/payouts) and select
   **Send payments**.
2. Choose the recipient and enter the amount, description, and payment date.
3. Check **Mark as reimbursement**.
4. Review and submit the payment.

The same checkbox is available when recording an off-platform payment in the
[external payment](/payments/send-money-with-payments#recording-off-platform-payments)
flow.

## Marking payments in a bulk CSV upload

The bulk payment CSV template includes an `is_reimbursement` column. Set the
value to `1`, `true`, `yes`, or `y` to mark that row as a reimbursement. Leave
it blank or set it to `0`, `false`, or `no` for a regular payment. The column
header `reimbursement` is also accepted.

Example CSV:

```csv theme={null}
email,description,amount (dollars),is_reimbursement,firstname (optional),lastname (optional)
alex@example.com,Contract work for May,1500,,Alex,Rivera
sam@example.com,Travel expense reimbursement,420.50,true,Sam,Lee
```

Rows marked as reimbursements display the **Reimbursement** pill in the review
grid so you can confirm before submitting the batch.

## Marking or unmarking an existing payment

You can change a payment's reimbursement status after it's been sent:

1. Open the Payments dashboard and find the payment row.
2. Click the row's overflow menu (the **⋯** icon).
3. Select **Mark as reimbursement** or **Unmark as reimbursement**.

You can also toggle the status from the payment detail view by clicking **Mark**
or **Remove** next to the **Reimbursement** field.

Updating the status immediately recalculates the recipient's 1099-NEC totals
and tax-collection thresholds for the year. If you change the status after a
1099-NEC has already been generated, review the updated form in
[Tax forms](/payments/accessing-tax-documents) to confirm the change is
reflected.

## Reimbursements in payment exports

When you export payments to CSV, each row includes a **Reimbursement** column
with the value **Yes** or **No**. Use this column to reconcile reimbursements
against your accounting records.