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Leslie S CPA
Level 1

Quickbooks online with online payroll- adding 2% shareholders health premiums

i have walked through adding the 2% shareholder fringe benefit on a client's books four or more times, and each time it is assessing taxes on the add-in, as if it was a regular payroll check.  This used to work fine two years ago, and last year the client was unable to do it.. When the 2% shaeholder health is set up there is a question of who pays the tax on it - employer or employee - This question shouldn't even exist, as it is simply a fringe benefit adjustment.  Either answer we put, when the paycheck is created, it shows funds are required to both pay payroll taxes on it, as well as then what I assume is the net amount for the benefit that has already been paid.   Help/I am at my whits end!

1 Comment 1
QuickBooks Team

Quickbooks online with online payroll- adding 2% shareholders health premiums

I understand the challenges you've encountered. Leslie. Let me provide information about adding fringe benefits to your 2% shareholders. 


It's important to note that the type of insurance you provide to your 2% shareholders and other employees can impact the tax treatment for S-corp insurance. It will also determine whether you can view this information in your payroll product.


Suppose your 2% shareholders have the same medical insurance plan as your other employees. In that case, the plan will be subject to federal and state withholding but exempt from Social Security, Medicare, and FUTA. 

On the other hand, you can only set up the S-corp item for shareholders with the same medical plan offered to all other employee. When you set this up, there will be no option for who pays the tax on it. 

Here's how:

  1. Hover to Payroll, then Employees.
  2. Choose your employee.
  3. From Pay types, select Start or Edit.
  4. In Additional pay types, select S-corp Owners Health Insurance.
  5. Type in the amount, leave it blank and enter it later when you run payroll.
  6. Press Save.

Meanwhile, you can visit this article to assign, and update pay schedules: Manage payroll schedules.  


You can always connect with me by clicking the reply button below. I'd be here to support you if you need further clarification regarding on fringe benefits, Leslie.

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