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Level 1

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

Hi,

I have set up health insurance as s-corp paid medical premiums to payroll items.  From everything I can see, I have set it up correctly. Here is the problem: when I create W-2s, the health insurance is added to box 1 as taxable federal wages, but it is not adding it to box 16, taxable state wages.  Does anyone have any advice on how to correct this.  I really don't want to override on the W-2 if I can avoid it.

 

Thanks so much.

5 Comments
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Moderator

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

Hi there, @BeckyLee,

 

Welcome to the QuickBooks Community. Let’s go over to your premium item setup to see if it’s taxable with your state withholding.

 

The Scorp Pd Med Premium will increase your wages and will be reported in box 14. Since box 16 did not increase by the premium amount, it could be the payroll item was exempt from your state income withholding.

 

Here’s what we need to perform first:

  1. Go to the Lists menu.
  2. Choose Payroll Item List.
  3. Double-click the health insurance to open the Edit payroll item window.
  4. Click Next until you see the Taxes window.
  5. Make sure your state withholding is checked. If not, please check it.
  6. Click Next until you hit finish.

This ensures your federal and state returns report accurate information moving forward.

 

To correct the state wages, we need to create a liability adjustment. See the steps below:

  1. Go to the Employees menu.
  2. Choose Payroll Taxes and Liabilities.
  3. Select Adjust Payroll Liabilities.
  4. Enter the Date and Effective Date. I suggest using the check date or enter 12/31/2018.
  5. Tick the Employee radio button and select the affected employee.
  6. Choose your state withholding under Item name.
  7. Enter the amount in the Wage Base column.
  8. Click Next adjustment to go to the next employee.
  9. Click OK once done.

You can re-run the W2 forms to see if the wages are showing the correct amounts.

 

Let me know if you need further assistance correcting your forms and I’m happy to help you. Have a great day.

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Level 1

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

Everything was set up right, but there was some glitch with the payroll item.  I ended up creating a new payroll item and deleting the old one and it worked perfectly. 

 

Thanks for your help!

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Moderator

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

Thanks for the quick response, @BeckyLee

 

You're most welcome! I'm glad to hear that you found it helpful.

 

The Community is always here if you need more assistance with payroll. I'd be delighted to be your guide once again. Wishing you and your business continued success.

 

 

Highlighted
Level 1

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

I don't have lists on the online version. How do you do this for online?

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QuickBooks Team

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

Welcome to the Online Community, @New Member.

 

In QuickBooks Online, there are three ways to record the S-Corp health insurance: Employee Tax Loan, Lowering or zeroing out taxes, and Company pays taxes.

 

The process differs depending on how you apply the pay type to the paycheck. To begin, set up the payroll item in your company.

 

Here’s how:

 

  1. Tap the Workers menu on the left panel to choose Employees.
  2. From the list, click on the employee’s name you’re working on to see the Employee details menu.
  3. Press the Pencil icon for Pay to access the How much do you pay section.
  4. Click the Pencil beside the pay type to view the lists of items.
  5. Scroll down to the Even more ways to pay section and then press the link to expand it.
    sc.png
  6. Then, mark the box for S-Corp Owner's Insurance and input the amount in the Recurring amount field or leave it as blank.
    sc1.png
  7. Press Done to keep the changes.

To add the insurance on the employee's check, check out the Setup and record S-Corp health insurance guide. Choose QuickBooks Online Payroll and select the Option that applies to your business.

 

Additionally, the Supported pay types and deductions article contains detailed information on how each item will show up on the tax forms.

 

Let me know if you need further assistance with QBO. I’m more than happy to help you. Enjoy the rest of the day. 

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