Need help personal use of company vehicle fringe benefit

smorgan01 · ‎January 08, 2021

I have setup the payroll item for my employees Personal use of a company vehicle as follows. The amount shows up on his w-2 in Box 14 as a fringe benefit but when I run my 940 it does not show up there. Please help.

Create the fringe benefit payroll item:

From Lists, select Chart of Accounts.
In the Payroll Item List, select Payroll Item then select New.
Select Company Contribution, enter a name for the company contribution, and select Next.
(Optional) Select the name of the Agency to which the liability is paid from the drop-down list, and select the number that identifies you to that agency.
From the Liability account ▼ dropdown, select the fringe benefit Addition expense sub-account you just created.
From the Expense account ▼dropdown, select the fringe benefit Deduction expense sub-account you just created.
Select Next.
Enter information in the Record of Employment (ROE) Tracking screen, select Next.
From the Tax Tracking Type ▼dropdown list, select the appropriate option based on the type of Fringe benefit and the CRA's T4130 Employers' Guide - Taxable Benefits and Allowances.
On the Taxes screen, select the appropriate taxes based on the type of Fringe benefit and the CRA's T4130 Employers' Guide - Taxable Benefits and Allowances.
Select Next twice (to bypass the Calculate based on quantity window).
In the Limit Type window, enter a default rate in the first section if the benefit will be a set amount, and enter the amount of any limit on the item in the second section.
Select Finish.

MaryLandT · ‎January 08, 2021

I appreciate you providing the detailed steps on how you set up the fringe benefit item, smorgan01.

Before entering the said item for your employee, there are set of payroll items you need to use depending on your situation.

Feel free to visit this link for instructions and detailed steps: Personal Use of Company Car (PUCC). It will show you how to set up and report PUCC on the employee's paycheck.

And, it's correct that the amount will show up on the W-2, box 14 with “PUCC (CAR)”. This is also reported on the 940 form box 3. Please refer to this article: Supported pay types and deductions explained, then find Personal use of company car (PUCC) to know how the item is reported on your federal forms.

If it's not reported on the 940 form, I recommend contacting our QuickBooks Desktop Payroll Team. They can help correct your payroll and ensure you have accurate returns on your payroll forms.

Here's how to get in touch with them:

Open QuickBooks.
Go to Help, then select QuickBooks Desktop Help.
Select Contact Us.
Enter your concern, then select Continue.
Choose a way to connect with us:
- Start messaging with a support expert.
- Get a callback from an expert (availability may be limited).

You can also chat with an expert through these links:

Don't hesitate to leave a comment below if there's anything else I can help you with today. Thank you and stay safe!

smorgan01 · ‎January 11, 2021

Thank you so much for your quick response. I saw those instructions but when I read deeper it kept saying to do the addition if the employee was not going to be receiving any additional wages for the year. I added it to the last paycheck so he did have wages to pay for his taxes. Here are the items that I saw how to create. I

did not want to increase his net pay. I attached a file which is the screen shot of the items I created.

Set up a taxable fringe benefit payroll item

To set up a taxable fringe benefit payroll item:

From Lists, select Payroll Item List.
Select Payroll Item then select New.
Select Custom Setup.
Select either Company Contribution or Addition, and select Next.
- Company Contribution: Adds the value of the fringe to be taxed but doesn't increase net pay
- Addition: Adds the value of the fringe to be taxed and increases net pay
Enter a name for this item and select Next.
Select an Expense account and Liability account from the drop-down lists and select Next.
From the Tax Tracking Type drop-down list, select Fringe Benefits and select Next.
Select Next twice (to bypass the Calculate based on quantity window).
Enter that default rate in the first section of the Default rate and limit window if the benefit will be a specific amount.
Enter the amount of any limits on the item in the second section of the window.
Select Finish.

After you've created the payroll item, select the scenario that fits how the fringe benefit will be paid to the employee:

If the amount will be included on a paycheck with regular wages to offset the taxes, enter the amount, using the Fringe Benefit payroll item, under Other Payroll Items.
No other deductions need to be added as the amount isn't added to the net check, and only taxes are calculated.
If the employee won't receive any further wages for the year, and the employer will loan the tax amount to the employee, select Addition, select None for Tax Tracking, and the payroll item (for example, called Advance for payroll tax) on the paycheck for the tax amount.
This amount must be paid back to the employer by the employee in the time frame outlined in Publication 15 (Circular E).
If the employee won't be receiving any further wages for the year, and the employer will be the one paying for the taxes, select Addition, and a Tax Tracking type of Compensation, and the payroll item to gross up the check.

You are responsible for determining the value of all non-cash fringe benefits. For more information, see Section 3 of IRS Publication 15-B.

I used these instructions:

Set up a taxable fringe benefit payroll item

Creating a taxable fringe benefit payroll item is a multi-step process.

Create an expense account for the fringe benefit:

From Lists, select Chart of Accounts.
Select Account then select New.
Select Expense, and select Continue.
Enter an Account Name (for example, Employee Health Plan)

Create a sub expense account for the fringe benefit addition:

From Lists, select Chart of Accounts.
Select Account then select New.
Select Expense, and select Continue.
Enter an Account Name (for example, Employee Health Plan - Benefit Addition)
Specify that this account is a Sub-account of the main fringe benefit expense account you just created.

Create a sub-expense account for the fringe benefit deduction:

From Lists, select Chart of Accounts.
Select Account then select New.
Select Expense, and select Continue.
Enter an Account Name (for example, Employee Health Plan - Benefit Deduction)
Specify that this account is a Sub-account of the main fringe benefit expense account you just created.

Create the fringe benefit payroll item:

From Lists, select Chart of Accounts.
In the Payroll Item List, select Payroll Item then select New.
Select Company Contribution, enter a name for the company contribution, and select Next.
(Optional) Select the name of the Agency to which the liability is paid from the drop-down list, and select the number that identifies you to that agency.
From the Liability account ▼ dropdown, select the fringe benefit Addition expense sub-account you just created.
From the Expense account ▼dropdown, select the fringe benefit Deduction expense sub-account you just created.
Select Next.
Enter information in the Record of Employment (ROE) Tracking screen, select Next.
From the Tax Tracking Type ▼dropdown list, select the appropriate option based on the type of Fringe benefit and the CRA's T4130 Employers' Guide - Taxable Benefits and Allowances.
On the Taxes screen, select the appropriate taxes based on the type of Fringe benefit and the CRA's T4130 Employers' Guide - Taxable Benefits and Allowances.
Select Next twice (to bypass the Calculate based on quantity window).
In the Limit Type window, enter a default rate in the first section if the benefit will be a set amount, and enter the amount of any limit on the item in the second section.
Select Finish.

This was all very confusing and appeared to be getting conflicting information.

Ryan_M · ‎January 11, 2021

Hi @smorgan01,

Thank you for your prompt reply. I'll point you in the right direction for support with your query.

At this point, it's best to contact our Payroll Support for further assistance. They can investigate as to why you have this issue, as well as provide a resolution for it.

Take a look at this article for the steps: Contact Payroll Support.

Utilize the comment section below if you need further assistance with your QuickBooks Desktop company. I'll get back to you as soon as I can.

smorgan01 · ‎January 11, 2021

I did contact support. I was on the phone with them for 2 1/2 hours. At the end they said there was a known problem with how QB puts the fringe benefit on my 940 and just had me override it. My biggest question is did I set it up correctly?

SarahannC · ‎January 11, 2021

Hello there, smorgan01.

It looks like you've followed the instruction for Canada. For the US version, you can create payroll items for taxable fringe benefits by following the first set of steps you've shared above, or you can check this article and go through the same steps to set up a fringe benefit correctly within your company file.

That will help you set up a taxable fringe benefit payroll item correctly. In case the Fringe Benefits amount appears on the wrong line on Form 940, you've got this article to resolve issues about it: Fringe benefits.

If you need further clarification or have other questions, please let me know by commenting below. Take care and stay safe always.

smorgan01 · ‎January 11, 2021

OK thanks. I wish it said these instructions are for Canadian users. What liability and expense account should I designate? If I put payroll liabilities it will show that the amount of the fringe benefit is owed in cash (which it is not). I am confused on which expense account to code it to also. If it helps any, I ran a tax worksheet for my 940 today and it is showing a difference of the amount of the fringe benefit. On the worksheet it says the difference should be zero. For some reason the Total taxable FUTA wages are minus the fringe benefit. The total taxed wages include the fringe benefit. I also have a call in to QB support but they have not been able to give me a solution either.

JasroV · ‎January 11, 2021

Thanks for the prompt reply and clarification, @smorgan01.

Regarding in what liability and expense account to use, it would be best to work with your accountant for guidance. They’ll be able to share with you their expert advice on which account to designate. This way, we can guarantee your account is well accounted for after recording this.

If you’re not affiliated with one, you can visit our ProAdvisor page and look for one from there.

Once you’re all set, you can now run your payroll effectively. You can refer to this article that can walk you through the detailed steps: Get started with Payroll.

Keep me posted if you have other follow-up questions about managing your payrolls in QuickBooks. I’ll be around to help you. Take care and keep safe.

Paige721 · ‎January 19, 2021

taxable fringe benefit amount wasn't added to state wages. how to fix?

Paige721 · ‎January 19, 2021

Set up fringe benefit for personal use of auto. The federal wages are correct but that amount was not added to taxable state wages. How do i fix it?

ReyJohn_D · ‎January 19, 2021

I can help make sure those fringe benefit gets added to your taxable wages, @Paige721.

QuickBooks depends on the payroll item you've created when tracking your fringe benefits for personal use of auto. Thus, you can check the payroll item set up to help correct and add those amounts to the taxable state wages.

Here's how:

Click the Lists menu at the top, and then choose Payroll Item List.
Select the payroll item you've created. Right-click on it, and then choose Edit Payroll Item.
Review the expense and liability accounts. Check also the tax tracking type, and other details needed.
Click Finish when you're ready.

To learn more about this, please head to this handy article: Fringe benefits for Personal Use of Company Car (PUCC).

If you get the same outcome, you can fix this by entering a liability adjustment. This way, it will increase the taxable state wages for the withholding item.

First, you can use our Payroll Checkup tool or run the Payroll Summary report to locate the info you'll need for the adjustment.

Once done, please follow Step 2 outlined in this article to begin your payroll liability adjustments: How to adjust payroll liabilities in QuickBooks Desktop.

Once you're up and running again, you can start paying and filing your payroll taxes. This way, you're always compliant and keep your records correct.

Fill me in if you need more payroll tax insights. I'm always ready to help you.

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Need help personal use of company vehicle fringe benefit