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rjlmccann
Level 2

Health Insurance reimbursement

I recently gained a new client that reimburses only one employee's health insurance premium (less than $2.5k for the year). The employee selected this health insurance independently of the company, pays the premium & then furnishes receipt of payment and is reimbursed the cost of the premium in his paycheck.   

Q1:  Is this taxable income?   Q2:  Is this reported separately in some way on the W2?  None of the Box 12 codes seems to apply for this situation.   Q3:  Is it deducted from SS & Medicare wages?

 

I believe it is taxable income but not included as part of SS & Medicare wages... ???

 

 

Solved
Best answer January 27, 2021

Best Answers
Jovychris_A
Moderator

Health Insurance reimbursement

Hi there, @rjlmccann.

 

I appreciate the details a lot. I'll help you answer these questions.

 

In Q1: Yes, you're correct that this is a taxable income. Q2: Yes, it separately populates Box 14: Other in W-2, and it won't apply (won't show up in W-2) in Box 12 since its basis is on the items used in paychecks. Q3: Yes, that it is deducted from SS & Medicare wages.

 

You can check these articles for more insights on how QuickBook populates W2 and supported pay types and deductions impacts federal taxes and forms:

 

Also, I encourage you to consult an accountant for professional advice on accounting taxes.

 

Let me know if you need assistance with QuickBooks. I'll keep my notifications open. Stay safe and well, rjlmccann!

View solution in original post

7 Comments 7
Jovychris_A
Moderator

Health Insurance reimbursement

Hi there, @rjlmccann.

 

I appreciate the details a lot. I'll help you answer these questions.

 

In Q1: Yes, you're correct that this is a taxable income. Q2: Yes, it separately populates Box 14: Other in W-2, and it won't apply (won't show up in W-2) in Box 12 since its basis is on the items used in paychecks. Q3: Yes, that it is deducted from SS & Medicare wages.

 

You can check these articles for more insights on how QuickBook populates W2 and supported pay types and deductions impacts federal taxes and forms:

 

Also, I encourage you to consult an accountant for professional advice on accounting taxes.

 

Let me know if you need assistance with QuickBooks. I'll keep my notifications open. Stay safe and well, rjlmccann!

rjlmccann
Level 2

Health Insurance reimbursement

Thank you so much Jovychris_A!    So the premium is included in Box 1, not in Boxes 3 & 5 and called out separately in Box 14; did I understand your response correctly?   

katherinejoyceO
QuickBooks Team

Health Insurance reimbursement

Yes, @rjlmccannYou can also consult a tax expert or an accountant to guide you with this process. 

 

I'm always around here to help with your QuickBooks Concerns. Take care.

092384
Level 1

Health Insurance reimbursement

I'm in the same situation. We have the payroll side of things set up—which is how the employee gets reimbursed for the cost of the health insurance premium. My question is whether we also need to enter this as an expense is QBO, or is it enough to manage it through payroll (and we collect receipt as proof of payment for our records)?

RoseJillB
QuickBooks Team

Health Insurance reimbursement

Allow me to join this thread to address your query, @092384.

 

Since you already process the reimbursement through your payroll account. You will not need to record this as an expense in QuickBooks Online (QBO). Instances like that will cause the transactions to be duplicated.

 

Moreover, you can also pull up a variety of payroll reports in QuickBooks. It will give you a closer look at your employee's total wages, deductions, and tax information in a certain period. For the complete list of available payroll reports and how to pull them up, kindly refer to this article: Run payroll reports.

 

Feel free to add a comment if you have more questions about payroll. The Community always has your back. Have a good one!

LDVA2023
Level 1

Health Insurance reimbursement

Hi, could you please explain how to set up the Payroll Item in QB Desktop for this type of payment? Thanks very much!

Candice C
QuickBooks Team

Health Insurance reimbursement

Hey, @LDVA2023

 

Congrats on making your first post here in the Community! 

 

The best route would be to consult with your accountant to be sure on this situation and what would be the best direction for you and your business. 

 

Feel free to come back and let us know how the conversation went with your accountant. Have a great day! 

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