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Level 1

How do i set up a taxable benefit for employer paid life insurance and AD&D so it shows up on each pay-cheque?

I thought this would be easy to figure out. I simply want to add the taxable benefit to each employee's paycheque for employer's paid life insurance and AD&D.

I started by adding a new payroll item, selecting company contribution.

I am stuck at the screen called 'Agency for company-paid liability'. I don't want to enter a liability or expense account as this should not create any entry in the accounting records. [The insurance is paid by entering bills.]

Thanks for any help with this set-up.
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Best answer 03-11-2019

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Level 3

How do i set up a taxable benefit for employer paid life insurance and AD&D so it shows up on each pay-cheque?

I believe the "Agency" field is optional, but I enter the name anyway.

The program urges you to enter both a liability and an expense account, but you can fool it.  You must enter 2 separate accounts, but they can both be expenses - just ignore the warning pop-up.

For example, for one of my clients I use account 6421 "LI & ADD" (expense) for the "Liability" account, and 6422 "LI & ADD Benefit" (also an expense) for the "Expense" account; 6422 is a sub-account of 6421.  The accounts offset and don't appear in most reports.

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Highlighted
Level 3

How do i set up a taxable benefit for employer paid life insurance and AD&D so it shows up on each pay-cheque?

I believe the "Agency" field is optional, but I enter the name anyway.

The program urges you to enter both a liability and an expense account, but you can fool it.  You must enter 2 separate accounts, but they can both be expenses - just ignore the warning pop-up.

For example, for one of my clients I use account 6421 "LI & ADD" (expense) for the "Liability" account, and 6422 "LI & ADD Benefit" (also an expense) for the "Expense" account; 6422 is a sub-account of 6421.  The accounts offset and don't appear in most reports.

View solution in original post

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Level 1

How do i set up a taxable benefit for employer paid life insurance and AD&D so it shows up on each pay-cheque?

Thank you very much. This does it.
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Level 3

How do i set up a taxable benefit for employer paid life insurance and AD&D so it shows up on each pay-cheque?

You're welcome.
Highlighted
Level 1

How do i set up a taxable benefit for employer paid life insurance and AD&D so it shows up on each pay-cheque?

Thank you. I thought about that too but wasn't sure if that was a good idea. I like your idea of the sub account. I will do the same. It would be nice if Intuit could compensate for that type of payroll item.
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Level 3

How do i set up a taxable benefit for employer paid life insurance and AD&D so it shows up on each pay-cheque?

You're welcome.
I agree, it's odd that QB doesn't specifically provide for this type of benefit or explain how to record it.
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Level 1

How do i set up a taxable benefit for employer paid life insurance and AD&D so it shows up on each pay-cheque?

Safari818, one comment:  setting up the offsetting expense accounts as you suggest essentially removes the expense from the p&l, which means the company loses the tax write-off.   Your thoughts?
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Level 3

How do i set up a taxable benefit for employer paid life insurance and AD&D so it shows up on each pay-cheque?

The expense is recorded each month as a Bill from the insurer.  The purpose of the payroll entries is merely to allocate that expense as a taxable benefit to the employees.  Nothing is lost.
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Level 1

How do i set up a taxable benefit for employer paid life insurance and AD&D so it shows up on each pay-cheque?

Of course.  I was thinking of using the original expense account as the 'benefit' liability, but I see now that you're actually suggesting creating 2 separate 'dummy' expense accounts.  Thanks.
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Level 3

How do i set up a taxable benefit for employer paid life insurance and AD&D so it shows up on each pay-cheque?

You're welcome.  To really tie it together you can make my "dummy" expense accounts both subaccounts of the "original" expense account.
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Level 1

How do i set up a taxable benefit for employer paid life insurance and AD&D so it shows up on each pay-cheque?

I set up an "other earnings" code..  and also an employee deduction for the exact same amounts.. that way it is added to earnings for tax purposes and then deducted so that it does not add to his/her monetary earnings
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Level 1

How do i set up a taxable benefit for employer paid life insurance and AD&D so it shows up on each pay-cheque?

I enter the taxable benefit over $50,000 using the irs guidelines on the employees last paycheck.  This amount will appear on W2 box 12 code C.  Be aware that the payroll item is not set up correct.  This income is not hitting the NYS45 ATT item d; gross federal wages and distribution.  I had to overide figure to reconcile with W3 number 1.  

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Level 3

How do i set up a taxable benefit for employer paid life insurance and AD&D so it shows up on each pay-cheque?

U.S. payroll and tax reporting is different from Canadian.
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Level 1

How do i set up a taxable benefit for employer paid life insurance and AD&D so it shows up on each pay-cheque?

Even after completing the set-up, I later found that this amount is not being submitted to the STATE taxing agency through the Quickbooks report.  Amounts will have to be overridden to be accurate.
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Level 1

How do i set up a taxable benefit for employer paid life insurance and AD&D so it shows up on each pay-cheque?

Thank you. (I didn't realize yours was a US question.)

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Level 1

How do i set up a taxable benefit for employer paid life insurance and AD&D so it shows up on each pay-cheque?

I agree.   QBO should have a much easier way to do this in the background.  I have same issue with employer contributions to employee rrsp.  This should all be easily set up in the payroll  settings.  

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Level 2

How do i set up a taxable benefit for employer paid life insurance and AD&D so it shows up on each pay-cheque?

I am just plain angry that Intuit Quick Books forces these backdoor fixes.  It brings to light that they have no one with practical experience reviewing their QB product before it goes out.  

 

It would be so simple for QB to be set up with the choice to have the employEE's share of insurances' premiums entered as a credit (decrease) in the company's insurances' expense accounts when payroll is processed.  Then, when the insurance bill arrives it is simply entered as a debit (increase) to the insurance expense account, partially off-set by the employEE's share resulting in an accurate employER expense total, and credit (increase) to the insurance payable liability account.