cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Community Explorer **

How to add S-corp owner's health and life insurance to wages

I have S Corp paid health insurance set up to affect Federal and State taxes, but on the W-2 this amount is only showing up under Federal Wages, not State.  I am having to manually override the State wages for all of my clients.  Why isn't this working?

Solved
Best answer 01-02-2019

Accepted Solutions
Moderator

Re: How to add S-corp owner's health and life insurance to wages

Thanks for visiting the Community, Bethyde.

 

I can help you make sure that the S-Corp medical and life insurance payroll item affects the Federal and State taxes in the W-2 form.

 

If you are a 2% shareholder and offer the same medical insurance plan to all your employees, the tax tracking type typically used for this payroll item is "S-Corp Pd Med Premium". However, if the 2% shareholders have a different plan from the other employees, or do not offer the plan to their employees at all, the tax tracking type typically used for this is "Fringe Benefits". This article will give you more details: How to set up S-corporation medical payroll items.

 

First, ensure that you're using the correct tax tracking type. This will determine how the item should affect the tax forms or its taxability. Based on the tax tracking type, QuickBooks will also automatically selects the taxes that are almost always affected by this payroll item.

 

Here's how:

  1. Click the Lists menu at the top, then choose Payroll Item List.
  2. Double-click the S-Corp payroll item.
  3. Click Next twice and verify that you're using the correct tax tracking type.
  4. Click Next and check if the taxes selected are correct.
  5. Select Next until Finish.

The screenshots below show these steps as well.

 

image.png image.png

 

If you need to change the selections in the Taxes screen, I'd suggest consulting your accountant or tax advisor for assistance. You can also click the Default button to revert QuickBooks automatic settings.

 

Once done, please try creating the W-2 form again.

 

That should help you affect the State taxes in the W-2 form. I'd appreciate if you can update me on how it goes. I'll be here if there's anything else you need.

View solution in original post

7 Comments
Moderator

Re: How to add S-corp owner's health and life insurance to wages

Thanks for visiting the Community, Bethyde.

 

I can help you make sure that the S-Corp medical and life insurance payroll item affects the Federal and State taxes in the W-2 form.

 

If you are a 2% shareholder and offer the same medical insurance plan to all your employees, the tax tracking type typically used for this payroll item is "S-Corp Pd Med Premium". However, if the 2% shareholders have a different plan from the other employees, or do not offer the plan to their employees at all, the tax tracking type typically used for this is "Fringe Benefits". This article will give you more details: How to set up S-corporation medical payroll items.

 

First, ensure that you're using the correct tax tracking type. This will determine how the item should affect the tax forms or its taxability. Based on the tax tracking type, QuickBooks will also automatically selects the taxes that are almost always affected by this payroll item.

 

Here's how:

  1. Click the Lists menu at the top, then choose Payroll Item List.
  2. Double-click the S-Corp payroll item.
  3. Click Next twice and verify that you're using the correct tax tracking type.
  4. Click Next and check if the taxes selected are correct.
  5. Select Next until Finish.

The screenshots below show these steps as well.

 

image.png image.png

 

If you need to change the selections in the Taxes screen, I'd suggest consulting your accountant or tax advisor for assistance. You can also click the Default button to revert QuickBooks automatic settings.

 

Once done, please try creating the W-2 form again.

 

That should help you affect the State taxes in the W-2 form. I'd appreciate if you can update me on how it goes. I'll be here if there's anything else you need.

View solution in original post

Community Explorer **

Re: How to add S-corp owner's health and life insurance to wages

I have done everything right.  It will not add this amount into the State wages on the W-2.

Moderator

Re: How to add S-corp owner's health and life insurance to wages

Thanks for your quick response, Bethyde.

 

When recreating the W-2 form, please click the Start New Form button. This will ensure that the changes applied in the payroll item will reflect on the tax form. I've attached a screenshot below for your visual point of reference.

 

image.png

 

If it's still doing the same thing, please share a screenshot for the Taxes screen of the S-corp payroll item.

 

Please let me know how this turns out. I'm right here if you need more assistance.

Community Explorer **

Re: How to add S-corp owner's health and life insurance to wages

I just changed the "Calculate based on quantity" to "neither" (QB had automatically chosen "based on quantity") and now it works.  Thanks for your patience.

Moderator

Re: How to add S-corp owner's health and life insurance to wages

Hi there, @Bethyde.

 

You're most welcome! I'm glad to hear that these resources help you get back on track.

 

Thank you for dropping by. Please know that the Community has your back if you need assistance. Wishing you and your business continued success. 

Community Explorer **

Re: How to add S-corp owner's health and life insurance to wages

I am running into the same problem with it not flowing into state wages.  I have set up everything as you have described and have tried creating a new form, but it still doesn't flow to box 16 on the W-2.  Might you have any other suggestions?

 

Thanks

Anonymous
Not applicable

Re: How to add S-corp owner's health and life insurance to wages

Hi there, virtuebuilder,

 

Thanks for joining the conversation. I can help you get past the issue with the S-corporation payroll item on your W-2 form.

 

The way your payroll items affect your tax reporting depends on the Tracking Type you selected during the setup. In your case, since the S-corp item didn't flow on box 16 of your W-2 form, we can create a Wage Base adjustment to get your work done. Let me guide you how to do that:

  1. Click the Employees tab.
  2. Choose Payroll Taxes and Liabilities.
  3. Select Adjust Payroll Liabilities.
  4. Enter the correct Effective Date (last day of the affected quarter).
  5. Click the Employee radio button.
  6. Choose the employee name.
  7. On the Item Name, enter the State Withholding which is subject to the S-corp payroll item.
  8. In the Wage Base column, enter a positive adjustment amount to increase the limit.
  9. Select Do not affect accounts.
  10. If you have additional employees, click Next Adjustment and repeat the steps for each affected employee. 
  11. Click OK.

The adjustment should correct your W-2 form. You may want to check this article to know more about adjusting payroll taxes in QuickBooks Desktop: Adjust payroll liabilities

 

Please let me know how the troubleshooting goes, virtuebuilder. I want to make sure everything's all set on your end. Have a good one!

Need to get in touch?

Contact us