Once I updated my quickbooks payroll I was directed to set up the MN PFML via the setup wizard (per the Dec. 19th email).  Since we are a small business, our TOTAL rate is .66% (not .88%).  So, I have MN - Paid Leave Emp. set up on "other taxes" but the Emp. Portion rate is set at 0.00%.  Then I have MN-Paid Leave Co. set up with Co. Portion rate set to .66%.  I then, at the direction of the Quickbooks email dated December 23rd, set up the fringe benefit item.  It didn't say anything about needing to change anything that the Wizard had already set up.  When I talked to quickbooks over the phone they discouraged me from making any changes to the percentages that were set up with the wizard.  You mention to change the fringe benefit setup to .88% (which would only be .66% since we are a small business.  However the fringe benefit that is taxable is only the pick up portion (per the December 23rd email that would be found by subtracting the minimum employer contribution rate (.22%) from your actual contribution rate (.66% for a small business) which would be the .44% I have the fringe benefit set up to be.  

So would I need to change the other tax, MN - Paid Leave Co. portion, to the .22% (which is currently at .66% per the wizard) and not unassign the policy of the PFML payroll item you directed in your response?  

When I set up the Fringe Benefit payroll item I selected the Federal Unemployment, Medicare (co and employee) and social security (co and employee).  I did not select Federal Withholding or any other taxes (this was per the directions on the Dec. 23 email that said "uncheck all but the FICA and FUTA taxes". Please confirm this is set up correctly.

One last question, when does this fringe benefit show up as taxable income?  When setting up the fringe benefit tax item it indicated that as a fringe benefit this would show up on lines 1, 3, and 5 of the W2.  However, when I go to try a payroll, the Fringe Benefit does not show on the employee summary that shows the current salary or YTD salary. Shouldn't this fringe benefit show up there if it is going to be part of the W2?

I really appreciate any direction you can give me on this!

Thank you for the updates, @SuesMMI. I'm here to help clarify things for you.

Please know that QuickBooks support is correct in stating that changing the suggested setup in the wizard is not advisable. Since this setup is designed to automatically organize your employees' income tax accurately.

However, in your case, we need to perform some customizations to override the tax system without disrupting your calculations. You mentioned that your company is considered a small business, which can only cover a total of 0.66% of the overall contribution. To achieve the required 0.88% for the company portion, you have two options available:

The first option, as suggested by my colleague @MariaSoledadG, is to remove or unassign PFML and retain the fringe benefit. This will total 0.88%, which you will need to calculate manually.

The second option is to retain both payroll items: the 0.66% PFML set up by the wizard, and add a fringe benefit of 0.22% to achieve the total 0.88%. 

To address your last question, fringe benefits will indeed appear on your W-2, as they are typically considered taxable income. This applies unless your country's tax laws specifically exclude them, or if your employee is marked as tax-exempt.

I also recommend reaching your accountant for additional guidance since we are dealing with manual calculations to avoid messing up your taxes.

Let me know if you have any additional questions. We'll assist you promptly.

@Bryan_M    you are not understanding that the small employers rates are .66%  not .88%.  So thinking that rates need to equal .88% is incorrect thinking.    Small employers the medical premium rate is .46% and the family leave premium rate is .20% .   If the employer opts to cover the costs - it is still .66%

When I go to start payroll the add item wizard does not show up. What do I do now. 

Hi, ANMT. 

The Add Item Wizard for the new MN PFML pay items will launch when you pay your employees or add any new Minnesota employees. It'll prompt you to enter the employer and employee tax rates.

Potential scenarios to be aware of:

1. If as the employer, you're funding the program entirely, enter .88% or .66% (small employer rate) for Co. Portion Rate and 0% for Emp. portion rate.
2. If you're splitting the cost  with your employees, enter a percentage between 0.1% and 0.44% for their portion oh the tax.
3. If you're exempt from the program enter 0%.
4. If you have employees exempt from unemployment, use the MN- paid Leave.

Should you have any additional questions or concerns, feel free to reach out. Our Community Forum is always here to assist you.

I was told by a Quicbooks tech to go to each employee that's being paid - to enter in each of their template and put in the tax area for MN Paid Leave at .50%  to show their portion of .88% MN Paid Leave deduction. The employer will fulfill the other .44%. It shows it on payroll report. Its not showing as a deduction on the employees paycheck at all.  Something is not right here.......Can anyone help me. Please and Thanks

Hello there, @Kjstell.

Minnesota Paid Family and Medical Leave (PFML) is a new tax totaling 0.88% of wages, typically split evenly between employees (0.44%) and employers (0.44%). Small employers with fewer than 30 employees qualify for a reduced employer rate of 0.22%, while the employee rate stays at 0.44%.
 

In QuickBooks (QB) Payroll, you don’t need to manually update each employee's profile with the tax rate. Instead, create a PFML policy in Payroll Settings, specify the percentage split, and QB will automatically calculate and apply the deductions. 

Here's how:

1. Go to the Gear icon ⚙, and select Payroll settings.
2. From Minnesota Tax, select Edit ✎.
3. Under Minnesota Paid Family and Medical Leave Tax (PFML) Leave select Start.
4. Select your Minnesota full time employee count, and Indicate if you have a Paid Leave Only account number by selecting Yes or No.
5. Click Define Rates.
   • The percentages entered are based on the total contribution rate of 0.88%
   • If you qualify as a small business and cover your employee's portion of the premium, the maximum you can enter is 75% (which equates to a calculated rate of 0.66%).
6. Add your Policy Name, then select the effective start date of the policy.
7. Enter the percentages for you and your employees, then click Save.
8. Select Save, then Done.

These deductions will appear under the Taxes section on paychecks (not in Deductions) for payrolls processed after setup. Once complete, QB will start withholding PFML on the next paycheck dated after the setup.

If payrolls were already processed in January before the PFML policy was set up and assigned, there’s no need to worry. QB will automatically update and apply PFML deductions during the next payroll run.
 
For more clarification, feel free to leave a message below. We’re here to assist.

@GenieBabe_L 

I use Quickbooks Desktop payroll - I do not have the Gear Icon - can you please tell me where/how to complete this setup in Desktop Payroll?

Thanks for following up on this thread, rhillig.

I'm happy to provide some info so you're able to complete the PFML setup in your QuickBooks Desktop account.

You'll want to start by confirming you're using the latest payroll update. Here's how:
 

1. Go to Employees, then Get Payroll Updates.
2. To get the latest tax table, click Download Entire Update.
3. Select Update.

Afterward, there are a few notes to be aware of before considering to make changes to the new MN PFML tax items:
 

• The Add Item Wizard will prompt you to enter the employer and employee tax rates.
• If you're exempt from the program enter 0%.
• If you're splitting the cost with your employees, enter a percentage between 0.1% and 0.44% for their portion of the tax.
• If as the employer, you're funding the program entirely, enter .88% or .66% for Co. Portion Rate and 0% for Emp. Portion Rate.
• The Add Item Wizard for the new MN PFML pay items will launch when you pay your employees or add any new Minnesota employees.

The following article provides additional info about editing the new MN PFML tax items. Assistance is only a comment or post away if you have any other questions. The Community always has your back.

I’m am truly frustrated as well. I have QB desktop. When I set up the MN Paid Leave tax - the tech for QB says to leave it at .88%. That tech doesn’t know what’s she doing. She placed me on hold 3 times and took over and hour on the phone plus screen share. Still Not correct. It should be .44% for employer and .44% for employees. Equals .88% towards paying in for MN Paid Leave Tax. It’s not showing accuracy even doing each employee’s template under each payroll info area at .50%. I need to ask “add wizard”? I don’t have this option. Please help. Thanks