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Level 1

entering information for 3rd party sick pay

I have an employee that has 3rd party sick pay, I have set up everything according to the instructions, but it says nothing about what to do about Social Security and Medicare that has been deducted from the checks.

It says to enter the net check but if I do that then what happens with the SS & Medicare. I have called twice and can't get anyone that I can understand and that understands what I am needing. 

2 Comments 2

entering information for 3rd party sick pay

A warm welcome to the Community, homerironworks.

I'd be happy to lend a helping hand in entering the information for third-party sick pay in QuickBooks Desktop.


In order to enter the information for the Social Security and Medicare in QuickBooks, you'll need to create a taxable deduction payroll item.


Here's how:

  1. Click the Lists drop-down menu and select Payroll Item List.
  2. Click the Payroll Item button and then select New.
  3. Select Custom Setup, and click Next.
  4. Select Deduction, and click Next. Enter the name of the new payroll Deduction item (e.g., "Deduct Taxable Third-Party Sic") in the Enter name for deduction field.
  5. Click Next. In the drop-down for the Liability account, select the name of the Expense account created in step 1, and click Next.
  6. Select None from the Tax Tracking Type drop-down list, and click Next.
  7. Do not make any selections. Be sure that no taxes are selected, and click Next.
  8. Select Neither, and click Next.
  9. Select net pay, and click Next.
  10. Clear both fields (they should be blank). Click Finish.

However, if this is a non-taxable item, you can check out this article for detailed information: Enter non-taxable third-party sick pay.


If you need help with these steps or anything else, just let me know. I'll be here to help you out.

Susan H
Level 2

entering information for 3rd party sick pay

I've entered my 3rd party sick pay the say way I have for the past number of years.  But, this year the 3rd party withheld federal income tax.  I did the payroll adjustment as a COMPANY adjustment with a negative amount for the Federal Withholding.  It does not appear to be adjusting the amount I have to pay for the employer portion of all taxes I need to pay.  I have it set to affect liability and expense accounts.  What am I doing wrong?

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