I'm trying to add S Corp Owner's health insurance to the owner's payroll in QB Online via Run Payroll: Fringe Benefit Only. I can add the fringe benefit amount and override the employee's Federal & NY state tax withholdings, but the system doesn't allow me to override the local NY City withholding tax. Why and is there any workaround?
Thanks for replying Maybelle, but you misunderstood the issue. The employee's withholding setup is correct. Federal withholding, state withholding & city withholding are all applicable to this employee's normal compensation and was in fact properly done throughout the year.
The issue is that since this employee is also the S Corp owner, his health premiums (paid by the company during the year) need to be added to his gross taxable compensation for payroll reporting (W-2, 941, 940, etc.). This fringe benefit is not subject to Social Security, Medicare, or income tax withholding. After I enter the fringe benefit amount [Run Payroll: Fringe Benefit Only] I click on the pencil and expand the Employee taxes category. Here's where the problem is. The Federal income tax, NY State income tax and NY City income tax boxes are all pre-populated with tax withholding amounts. The system allows me to override Federal and NY State withholdings to zero....but does NOT allow me to do the same in NY City withholding.
Yes, that's what I've done and I'm waiting on your back-office technicians to resolve the problem.
It's just very frustrating that I continue to have this very same issue each & every year and the software development team has yet to implement a program change that would undo this system deficiency / limitation. And this time around I've been told that QB Online is charging me a fee for this assistance when in all prior years it was done free of charge.