## 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](https://help.trykarat.com/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:

```
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](https://help.trykarat.com/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.