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Best answer January 28, 2022
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I've got your back in tracking and submitting taxable third-party sick pay in QuickBooks Desktop (QBDT), @Donna NWF. This way, you're able to manage your taxes and payroll transactions accordingly.
Third-Party Sick Pay is a payment that an employee receives from a third party, other than their employers, such as insurance providers or trusts. These payments are also known as short-term disability payments.
How you enter the taxable third party sick pay in QBDT depends on who will submit the tax payments for employee paid taxes (such as Medicare and Social Security employee portion) and who will file the tax form.
Before we start, please note that to allow the taxes to be withheld from actual wages paid to the employee, taxable third-party sick pay should be included with a regular paycheck whenever possible. If this is not possible (for example, if the employee has not yet returned to work or the sick pay crosses over to another calendar year), then an "employee advance" may be necessary to cover the taxes.
You'll first have to start by creating an expense account. This is to track the third-party sick pay in your Chart of Accounts. Here's how:
- Go to Lists, then choose Chart of Accounts.
- Select Account, and New.
- Choose Expense and Continue.
- Enter the name of the new Expense account (i.e., Taxable Third-Party Sick Pay) in the Account Name field. Note: We recommend that you create this Expense account as a sub-account of "Payroll Expenses" to make the new account easier to find and to associate it with payroll expenses. To do this, check the Subaccount of box and select Payroll Expenses from the drop-down list.
- Click Save & Close.
Next, you'll have to create an additional payroll item and a deduction to report the third-party sick pay on employees' W-2. Then finally, create the employee advance payroll item to cover employee paid taxes on third party sick that employee received directly from the insurance provider.
For the step-by-step guide, please refer to this article: Track and submit taxable third-party sick pay. Then, since the employee portion of Social Security, Medicare, and/or federal withholding has been paid by a third-party, also follow the additional steps at the end of this article.
Also, to further guide you in all your payroll tasks with QBDT, I'd recommend checking out this article: Help Articles for QuickBooks Desktop Payroll . It includes topics about processing payroll, taxes, and managing workers and employees, to name a few.
Let me know if you have other payroll concerns and questions about dealing with third-party sick pay in QBDT. Don't hesitate to drop a comment below and I'll gladly help. Take care, and I wish you continued success, @Donna NWF.
I've got your back in tracking and submitting taxable third-party sick pay in QuickBooks Desktop (QBDT), @Donna NWF. This way, you're able to manage your taxes and payroll transactions accordingly.
Third-Party Sick Pay is a payment that an employee receives from a third party, other than their employers, such as insurance providers or trusts. These payments are also known as short-term disability payments.
How you enter the taxable third party sick pay in QBDT depends on who will submit the tax payments for employee paid taxes (such as Medicare and Social Security employee portion) and who will file the tax form.
Before we start, please note that to allow the taxes to be withheld from actual wages paid to the employee, taxable third-party sick pay should be included with a regular paycheck whenever possible. If this is not possible (for example, if the employee has not yet returned to work or the sick pay crosses over to another calendar year), then an "employee advance" may be necessary to cover the taxes.
You'll first have to start by creating an expense account. This is to track the third-party sick pay in your Chart of Accounts. Here's how:
- Go to Lists, then choose Chart of Accounts.
- Select Account, and New.
- Choose Expense and Continue.
- Enter the name of the new Expense account (i.e., Taxable Third-Party Sick Pay) in the Account Name field. Note: We recommend that you create this Expense account as a sub-account of "Payroll Expenses" to make the new account easier to find and to associate it with payroll expenses. To do this, check the Subaccount of box and select Payroll Expenses from the drop-down list.
- Click Save & Close.
Next, you'll have to create an additional payroll item and a deduction to report the third-party sick pay on employees' W-2. Then finally, create the employee advance payroll item to cover employee paid taxes on third party sick that employee received directly from the insurance provider.
For the step-by-step guide, please refer to this article: Track and submit taxable third-party sick pay. Then, since the employee portion of Social Security, Medicare, and/or federal withholding has been paid by a third-party, also follow the additional steps at the end of this article.
Also, to further guide you in all your payroll tasks with QBDT, I'd recommend checking out this article: Help Articles for QuickBooks Desktop Payroll . It includes topics about processing payroll, taxes, and managing workers and employees, to name a few.
Let me know if you have other payroll concerns and questions about dealing with third-party sick pay in QBDT. Don't hesitate to drop a comment below and I'll gladly help. Take care, and I wish you continued success, @Donna NWF.
Thanks for posting in the Community, Saphire605.
Box 13 is checked only if you are a "Third Party Payer", or you are reporting amounts paid by a third party for sick pay. Here's your guide on how to populate the boxes in W-2: W2 form boxes explained. Also, third-party sick pay is a form of compensation paid to your employees who can’t work due to illness or injury. It can be provided by insurance providers, trusts, or other third parties.
Also, let's make sure we're using the correct tax tracking type for your third-party sick pay payroll item. Here's how:
- Go to Lists at the top.
- Select Payroll Item List.
- Double-click your third-party sick pay addition item. Then, hit Next two times until you reach the Tax tracking type section.
- Make sure to choose Compensation on the drop-down. Tick Next until Finish.
Here's what it looks like:
After that, go back and check your form again. Please refer to this guide for the step-by-step instruction by scrolling over to Scenario 2: Third-party withholds, employer submits W2: Track and submit taxable third-party sick pay.
If you need help with other payroll tasks, feel free to browse for specific topics here and look for responses that fit your concern.
Keep me posted if you still have questions or concerns with payroll. I'm always here to help. Take care always.
