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Vickie31
Level 1

Care Act Section 127 Educational Assistance

How do I set up an employee pretax contribution to be paid on their student loan, Cares Act Section 127

Solved
Best answer September 08, 2021

Best Answers
DebSheenD
QuickBooks Team

Care Act Section 127 Educational Assistance

I appreciate you for letting us know the results of the steps you've done, Vickie31.
 

In setting up an employee pretax contribution, you need to first set up payroll to accept and track the credit.

Here's how:

 

  1. Go to the Payroll menu and choose Employees.
  2. Click the name of the employee you want to change its pay type.
  3. In the Pay section, click the Edit or Pencil icon.
  4. Scroll down to section 3 How much do you pay employee? and click on the Edit or Pencil icon.
  5. Go to the CARES Act section and check the applicable pay items you want to include.
  6. Hit Done

 

You can check this article for additional information about the process in setting up Educational Assistance: How to set up and track the Employee Retention Credit under the CARES Act.   

Additionally, I've included this article that'll help you on how to track payroll: Run payroll reports.

Feel welcome to get back on this thread if you'll need assistance in dealing with payroll tasks. We're always here to help you.

View solution in original post

6 Comments 6
AileneA
QuickBooks Team

Care Act Section 127 Educational Assistance

Hello, Vickie31. 

 

You can set up an employee pretax contribution to be paid on their student loan. First, you'll need to set up your payroll to accept and track the credit. By adding it as a Reimbursement item or a new Nontaxable Pier Diem at a new pay type under a nontaxable item. Though, this is just a workaround as the Education Assistance program is not yet available in QuickBooks. Here's how:

 

  1. Go to the Payroll menu and select Employees.
  2. Select the name of the employee you want to update its pay type.
  3. In the Pay section, click the Edit or Pencil icon.
  4. Scroll down to section How much do you pay employee? and click on the Edit or Pencil icon.
  5. Add pay type as Reimbursement  or Nontaxable Pier Diem.

 

To know more details about the process, you can check out this article: How to set up and track the Employee Retention Credit under the CARES Act.   

 

Lastly, I've added an article that can help you with your future task in case you want to track your business' wages and expenses: Run payroll reports.

 

Start a new thread or visit this post again if you have concerns with your QuickBooks program. I'm here to offer help again. Stay safe!

Vickie31
Level 1

Care Act Section 127 Educational Assistance

Thanks for the reply.  

 

When I go to the Cares Act section this is for Employee Retention only it does not give an option for the Educational Assistance program.

 

Still looking for a solution.

DebSheenD
QuickBooks Team

Care Act Section 127 Educational Assistance

I appreciate you for letting us know the results of the steps you've done, Vickie31.
 

In setting up an employee pretax contribution, you need to first set up payroll to accept and track the credit.

Here's how:

 

  1. Go to the Payroll menu and choose Employees.
  2. Click the name of the employee you want to change its pay type.
  3. In the Pay section, click the Edit or Pencil icon.
  4. Scroll down to section 3 How much do you pay employee? and click on the Edit or Pencil icon.
  5. Go to the CARES Act section and check the applicable pay items you want to include.
  6. Hit Done

 

You can check this article for additional information about the process in setting up Educational Assistance: How to set up and track the Employee Retention Credit under the CARES Act.   

Additionally, I've included this article that'll help you on how to track payroll: Run payroll reports.

Feel welcome to get back on this thread if you'll need assistance in dealing with payroll tasks. We're always here to help you.

sumdigi
Level 1

Care Act Section 127 Educational Assistance

It does not appear you have answered the original poster's question. In fact, she replied to say that when she followed your steps, she gets to a point where there is no option for Educational Assistance. You replied to her, marking it "solved," by reposting the same steps as in your original reply. How does this answer the original post plus her reply?

 

I also am looking to set up the Educational Assistance tax-free contribution per Section 127 of the CARES act, which has been extended to 2025 and, therefore, is here to stay.

 

When we click on the CARES section of "additional pay types" there is no option for Education Assistance, which is distinct from the "Employee Retention Credit," the only available options.

 

Does QuickBooks need to catch up with Congress and create this option in Additional Pay Types? That's fine, but we need to know if that is in fact the answer. We also need a valid workaround to this in the meantime.

 

Thank you.

sumdigi
Level 1

Care Act Section 127 Educational Assistance

Hi Vickie31,

 

I am also looking for a solution to this. Yesterday I called into support and received the following workaround. What do you think?

 

"As of the moment, this specific provision for educational assistance is not yet a supported feature of QuickBooks Online payroll.

As a workaround, we can add it as new pay type under a nontaxable item. We can add it as 'Reimbursement' item or a new 'Nontaxable Pier Diem' on the employee's profile. 

Here's how we can set this up:

1. Click on Payroll from the dashboard
2. Employees
3. Click on Employee's name to edit their profile
4. Click the pencil icon on item "How much do you pay (employee's name).
5. Add pay type as Reimbursement or Nontaxable Pier Diem

We also suggest it would be great to consult a professional like an accountant or bookkeeper to know more about setting this type of pay type to an employee."

sumdigi
Level 1

Care Act Section 127 Educational Assistance

Hi Vickie31,

 

I am also looking for a solution to this. Yesterday I called into support and received the following workaround. What do you think?

 

"As of the moment, this specific provision for educational assistance is not yet a supported feature of QuickBooks Online payroll.

As a workaround, we can add it as new pay type under a nontaxable item. We can add it as 'Reimbursement' item or a new 'Nontaxable Pier Diem' on the employee's profile. 

Here's how we can set this up:

1. Click on Payroll from the dashboard
2. Employees
3. Click on Employee's name to edit their profile
4. Click the pencil icon on item "How much do you pay (employee's name).
5. Add pay type as Reimbursement or Nontaxable Pier Diem

We also suggest it would be great to consult a professional like an accountant or bookkeeper to know more about setting this type of pay type to an employee."

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