I'm not finding the tax tracking type Premium Only/125 in my list of tax tracking types. Why is it not there? I'm using Enterprise Accountant.

Atitude101 · ‎February 19, 2023

AileneA · ‎February 19, 2023

Hello, Atitude101.

I appreciate you for reaching out to us here in the Community. I understand how important it is to keep track of your health insurance taxes in QuickBooks Desktop.

Let's check how your health benefits insurance deduction item is set up. So that your Premium Only/125 is available in the system when you select the tax type, we need to ensure we follow the proper setup. Also, please ensure that your QBDT is updated to its latest release. This way, you'll always have the latest features and fixes for several problems.

Here's how to check the Set up a health benefit insurance deduction item:

Go to Lists, then Payroll Item List.
Select Payroll Item dropdown, tap New.
Press Custom Setup, then Next.
Click Deduction or Company contribution then Next.
Enter the item name such as medical, vision, and dental, and tap Next.
Hit the name of the agency to which liability is paid (or add it), and the account number. Then press Next.
Set the Tax Tracking Type to Premium Only/125 (for pre-tax) and None (for after tax).
Choose Next three times.
- For None tax tracking type, select net pay in the Gross vs. net window, then Next.
Leave Default rate and limit fields blank. You can add the rate and limit when the item is added to the employee profile.
Click Finish.

Moreover, for more insights about the Section 125 Health Insurance (Cafeteria Plan) set up in QBDT, you can always read through this reference: Set up a Section 125 Health Insurance (Cafeteria) plan payroll item in QuickBooks Desktop.

I suggest verifying and rebuilding the data if the issue persists. Your company file will be scanned for any damaged data using the verify tool, and anything that is detected will then be fixed using the rebuild tool. Also, it allows your QuickBooks software to update the data in the company file. For the details steps, please refer to this article: Verify and Rebuild Data in QuickBooks Desktop.

Feel free to update us on the result after performing the steps by commenting below. I'd like to ensure this is resolved for you. Take care always.

View solution in original post

AileneA · ‎February 19, 2023

Hello, Atitude101.

I appreciate you for reaching out to us here in the Community. I understand how important it is to keep track of your health insurance taxes in QuickBooks Desktop.

Let's check how your health benefits insurance deduction item is set up. So that your Premium Only/125 is available in the system when you select the tax type, we need to ensure we follow the proper setup. Also, please ensure that your QBDT is updated to its latest release. This way, you'll always have the latest features and fixes for several problems.

Here's how to check the Set up a health benefit insurance deduction item:

Go to Lists, then Payroll Item List.
Select Payroll Item dropdown, tap New.
Press Custom Setup, then Next.
Click Deduction or Company contribution then Next.
Enter the item name such as medical, vision, and dental, and tap Next.
Hit the name of the agency to which liability is paid (or add it), and the account number. Then press Next.
Set the Tax Tracking Type to Premium Only/125 (for pre-tax) and None (for after tax).
Choose Next three times.
- For None tax tracking type, select net pay in the Gross vs. net window, then Next.
Leave Default rate and limit fields blank. You can add the rate and limit when the item is added to the employee profile.
Click Finish.

Moreover, for more insights about the Section 125 Health Insurance (Cafeteria Plan) set up in QBDT, you can always read through this reference: Set up a Section 125 Health Insurance (Cafeteria) plan payroll item in QuickBooks Desktop.

I suggest verifying and rebuilding the data if the issue persists. Your company file will be scanned for any damaged data using the verify tool, and anything that is detected will then be fixed using the rebuild tool. Also, it allows your QuickBooks software to update the data in the company file. For the details steps, please refer to this article: Verify and Rebuild Data in QuickBooks Desktop.

Feel free to update us on the result after performing the steps by commenting below. I'd like to ensure this is resolved for you. Take care always.

benh1 · ‎March 28, 2025

I am able to find the tax tracking type "Premium Only/Section 125" on the employee deduction, but for the company contribution, there is not a tax tracking option for "Premium Only/Section 125."

How can I setup the company contribution to be pre-tax for medical premium contributions?

KiazzymaeC · ‎March 28, 2025

Welcome to the Community, @benh1. The option to set up a company contribution as Premium Only/Sections 125 is currently unavailable in QuickBooks Desktop. This specific setting is only provided for Deductions.

Since you want to set up your company contribution as pre-tax, I suggest you consult a tax advisor for advice on what option to choose for accuracy and what suits your business needs. They can provide tailored advice based on your company's specific circumstances and ensure that you choose the most appropriate options for setting up these contributions within QuickBooks

For your reference, here is an article that can guide you through the process of setting up a company contribution in QuickBooks: Set up a company contribution item.

Additionally, creating a payroll summary report in QuickBooks to review the total payments made to employees, including wages, taxes, deductions, and contributions over a specific period. This can be beneficial in running payroll reports and maintaining accurate records.

Please don't hesitate to reach out if you have any more questions or need further assistance with setting up company contributions. I'm here to provide continuous support and ensure that you have all the guidance you need to manage your payroll effectively in QuickBooks.

benh1 · ‎March 28, 2025

Thanks for the response, KiazzymaeC.

This is disappointing news, but good to know.

I do feel I need to leave this obvious comment, though: The fact that QB has figured out the employee side of the Premium Only/125 plan but does not have the company side figured out is downright perplexing, to be charitable.

I would leave a suggestion for QB to address this, but they never address customer concerns, so I won't.

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I'm not finding the tax tracking type Premium Only/125 in my list of tax tracking types. Why is it not there? I'm using Enterprise Accountant.