An expense refund (or reimbursement) is a deposit that goes against an expense. It is not income. It often cancels out all or part of an expense.
Example of an expense refund:
Let's say you purchased something off of Amazon for $100, and categorized the expense as Office Supplies. Later on, you received a deposit for $20 as a refund for an item you returned. This refund will show up as a deposit in your bank account or credit card account. By default, it will be marked as regular income as all deposits are, but this has to be corrected and changed into an Expense Refund.
How to mark a deposit as an expense refund:
In this case, change the Income Type to Expense Refund. You will be prompted to select which expense category to mark that deposit against. Select Office Supplies, or the appropriate category to match the original expense transaction being refunded, either fully or partially.
What does this look like on reports:
Your expense reports will now show these deposits as refunds against your total expenses. If you look at your expenses for Office Supplies, you'll see that you spent $100, but also that you received an expense refund of $20. Your total spend on Office Supplies in this case amounts to $80.00.