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batvalil
Level 3

Health insurance premium reimbursements

We offer 100% health insurance coverage to our employees (26 person office).    We have 2 employees who are obtaining health insurance on their spouses plan.  Therefore, we reimburse them for these premiums, up to the amount we would have paid for their coverage.  We want to include these reimbursements on their paychecks as an other addition as non taxable; however, we were told these payments should be taxed.  Anyone else have this situation?

4 Comments 4
PreciousB
Moderator

Health insurance premium reimbursements

Thank you for providing me with so much detail, batvalil.

 

First, let me share some insights about the health insurance in QuickBooks Online.

 

The employer would have to determine if the reimbursement for the employees is taxable or not. If you need to update some amounts on the payroll, you can delete and recreate the paycheck. Then, you can make an internal agreement with the employee to resolve the difference of the net amount.

 

These articles will give you information about the health insurance setup:

However, you can always reach out to us if you need assistance with the payroll correction. This will also ensure that the changes on the amount of the paycheck will take effect to the next payroll run.

 

Here's how to contact us:

  1. Log in to QuickBooks Online.
  2. Select Help at the top, then click Contact us.

Keep in touch with me if you still need more help with this. I'll be here. Have a good day.

Adavico
Level 1

Health insurance premium reimbursements

Curious to know if there was ever a suitable answer provided to this original question.  

DivinaMercy_N
Moderator

Health insurance premium reimbursements

Thank you for joining this thread, @Adavico.

 

Let me walk you through in adding a non-taxable reimbursement payroll item in QuickBooks Online:

 

  1. You'll need to add a Reimbursement pay type.
  2. Go to the Employees menu.
  3. Under the How much do you pay this employee? field, click Add additional pay types if you haven't selected any other pay types, or pick the pencil icon if you have.
  4. Select the Reimbursement checkbox.
  5. Click Done.

For more details, you may refer to this article: Reimburse an employee

 

However, if the health insurance reimbursement is taxable, here is a helpful article that will discuss more about the supported pay types and deductions in QuickBooks Online Payroll as well as how each impacts federal taxes and forms.

 

Don't hesitate to post a reply below if you have additional concerns with QuickBooks. I'm always here to help you. Stay safe and take care always. 

Adavico
Level 1

Health insurance premium reimbursements

Thank you very much for this information.  Our CPA has told us that the health insurance reimbursement is taxable & should show up in Box 1 of the W2.   I looked through the supported pay types & deductions.  I thought the taxable Health Insurance was the proper option until I noticed that it states this doesn't show up on the W2.  

 

Wondering if anyone else has encountered this and which pay type/deduction they utilized.  Other earnings seems to provide the results, but seeing how others in the community have handled this type of situation.

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