Bookkeeper here. I have employee benefits for me and my staff. I don't understand how the taxable benefits work.

Hi sherryhagemeier,

Welcome to the Commnunity. It's essential to correctly add a taxable benefit to keep your books balanced. QuickBooks Online payroll is a great program that gives you the ability to pay your employees and track your remittances. I'd be glad to point you in the right direction to get the support you need on employee deductions and company contributions.

I encourage you to contact an accountant. They'll be able to walk you through setting up the taxable benefit to ensure your books record the correct information and are balanced. If you don't have an accountant, you can find one near you by clicking on My Accountant on the left navigation menu> and then Find a pro to help.

Let me know if you have questions, I'll be happy to help.

I was wondering if you received an answer to your question. I am running into the same problem. The vendor bill is posting as an expense and the company taxable benefit is also posting as an expense. I have just discovered this issue and it goes back to 2016. I have been double posting to that same account since then. 

This was not helpful. I stated I am a bookkeeper. Many accountants have no idea how to set up taxable benefits in QBO.

I got a very poor response from a QBO staff member telling me contact an accountant. Seeing as I'm a Certified Bookkeeper and Payroll Compliance Professional, I doubt that an accountant is going to help me with the set up of taxable benefits. That said, I have changed the settings so that the benefits liability is posted to the expense account as a credit. This results in one of the transactions being reversed and the expense amount is correct. I hope this helps.

I was considering this approach as well, but I'm uncertain about the significant decrease in wages if it's entered as a company contribution alone. Additionally, it still posts to the same expense account. The challenge is that this is not a consistent amount, but rather based on the fluctuating billing amount each month. The taxes could potentially consume the entire paycheque, which is a concern.

The other option I tried was posting it into payroll as a taxable addition for the billed amount. I kept track of the amount the taxes increased, then had a second entry as a deduction for the difference between the full benefit paid and the taxes paid. This maintained the original payroll amount.

If this were the only thing I did with this, it would represent the actual expenses paid by the company. With this sequence, the glitch is with the bill; this is also expensed to the same account.

I am absolutely flummoxed as to how to fix this; for that matter, even how to fix going forward.

Thank you for your thoughts and insight, much appreciated.