How to include tax-free cost of living allowance in Paycheck Wizards?

Question

My paycheck includes a cost-of-living allowance, which per IRS Publication 516 is not included in W2 wages.  It is however, a line item on my pay stubs.

Any ideas on how I can account for non-taxable earning in the paycheck wizard?  If I exclude the allowance, my net pay is off, and if I include it, my W2 gross taxable income is over-inflated.

I'd like to be able to include it as non-taxable earnings, but can't quite figure out how to make that happen.  Anyone have any advice?

Feelenjoy · Answer

I looks like the tax reports are correct though, just the W2 Gross on the wizard page is off.  If that's the only error I can live with it.

Feelenjoy · Answer

Unfortunately that did not work.  I've tried all sorts of category permutations.  Right now I have an Allowances category that is not associated with any Tax related category and I the W2 gross is still off.  I've tried using my own category as well as the "other earnings" generic option.  No luck yet.

Bob_L · Answer

Create an income category called cost of living and a be sure there are no tax lines connected to it.  Then run the paycheck wizard and choose the option "other earnings" button right near the first income item and categorize it to the new cost of living category with the amount. That should do what you want.