cancel
Showing results for 
Search instead for 
Did you mean: 
mermaidgurl
Level 3

Set Up Pretax Aflac 100% Paid By Employee

How do I set up a PRETAX Aflac deduction paid 100% by the employee.  Thank you!

Solved
Best answer December 03, 2019

Best Answers
Kristine Mae
QuickBooks Team

Set Up Pretax Aflac 100% Paid By Employee

AFLAC is a supplemental insurance, Mermaidgurl. Let me guide you with setting it up.

 

First, let's create the item. Here's how:

  1. Click Lists, then go to Payroll Item List.
  2. Click Payroll Item, then select New.
  3. Select Custom Setup, then click Next.
  4. Select Deduction, then click Next.
  5. Enter a desired name, then click Next.
  6. Enter the agency name, select the liability account, then click Next.
  7. Select the tax tracking type, then click Next.
  8. Click Next on the Taxes page.
  9. Select Neither on the Calculate based on quantity page, then click Next.
  10. Select gross pay, then click Next.
  11. Enter the rate and limit, then click Finish.

Next, let's add it in the employee's profile. This way, the item will show when you create the paycheck. Here's how:

  1. Click Employees, then go to Employee Center.
  2. Double-click the employee name to open their profile.
  3. Go to the Payroll Info tab.
  4. Under Additions, Deductions and Company Contributions, add the AFLAC item.
  5. Enter the amount.
  6. Click OK

I'll add screenshots to better guide you.

 

 

 

 

I'll include an article about setting up a payroll item for an insurance for future reference. 

 

If there's something else that I can do for you, please tag me. I'll get back to you as soon as I can. 

View solution in original post

12 Comments
Kristine Mae
QuickBooks Team

Set Up Pretax Aflac 100% Paid By Employee

AFLAC is a supplemental insurance, Mermaidgurl. Let me guide you with setting it up.

 

First, let's create the item. Here's how:

  1. Click Lists, then go to Payroll Item List.
  2. Click Payroll Item, then select New.
  3. Select Custom Setup, then click Next.
  4. Select Deduction, then click Next.
  5. Enter a desired name, then click Next.
  6. Enter the agency name, select the liability account, then click Next.
  7. Select the tax tracking type, then click Next.
  8. Click Next on the Taxes page.
  9. Select Neither on the Calculate based on quantity page, then click Next.
  10. Select gross pay, then click Next.
  11. Enter the rate and limit, then click Finish.

Next, let's add it in the employee's profile. This way, the item will show when you create the paycheck. Here's how:

  1. Click Employees, then go to Employee Center.
  2. Double-click the employee name to open their profile.
  3. Go to the Payroll Info tab.
  4. Under Additions, Deductions and Company Contributions, add the AFLAC item.
  5. Enter the amount.
  6. Click OK

I'll add screenshots to better guide you.

 

 

 

 

I'll include an article about setting up a payroll item for an insurance for future reference. 

 

If there's something else that I can do for you, please tag me. I'll get back to you as soon as I can. 

View solution in original post

DebC-TSB
Level 3

Set Up Pretax Aflac 100% Paid By Employee

Hi,

 

Can you tell me what tax tracking type you chose?

Step #7. That's the most crucial part of setting up. 

 

Thank you.

Michael K
Moderator

Set Up Pretax Aflac 100% Paid By Employee

Hey there, @DebC-TSB. Thanks for joining the thread.

 

The Tax Tracking Type is None in most cases for deductions from post-tax health insurance and Premium Only/125 for deductions from pre-tax health insurance. To assess the taxability of the item, contact your health insurance administrator. To determine the tax tracking type for Health Savings Accounts and Flexible Spending Accounts or S Corp Medical, click the following links:

 

Please let me know if there's anything else I can do to be of assistance.

DebC-TSB
Level 3

Set Up Pretax Aflac 100% Paid By Employee

Hi Michael,

 

Thanks for the feedback. After a few trial and errors, and creating dummy W2s, I found a way to get the premiums out of box 14.

 

I prefer to use "Other" tax type. These deductions show up in box 12, with a clear label of what they are. Anything but a proper HSA, 125 or other Pretax payment belonging in Box 14 with a "W", imo, is not a good idea. 

There is no way to control what letter QB puts in box 14.

How I did it: For Pretax - click off all the taxes; PostTax - leave all taxes unchecked.

 

Deb Cartier

TOP SECRET Bookkeeping Inc

"Because it's nobody's business but yours!"

 

 

calicass83
Level 1

Set Up Pretax Aflac 100% Paid By Employee

We were told that this type of insurance premium is pretax for federal, but not for the State of California. When setting this up in Quickbooks Online, if we set it up as a healthcare deduction, it assigns pretax to Federal AND state - there is no way to separate them.

 

We were told by Quickbooks last year, that the only way to get it to be pretax for federal and not state is to set it up as an HSA, which seems incorrect and creates issues/errors for employees (specifically those using Turbo Tax) when taxtime comes, because the premium is appearing in Box 12, with Code W for an HSA.

 

Can you advise on the pre-tax status for federal vs state? Are you able to post instructions/screenshots for how to set this up in Quickbooks Online?

ReyJohn_D
Moderator

Set Up Pretax Aflac 100% Paid By Employee

Thanks for joining the thread, @calicass83.

 

There isn't a way to make the AFLAC pretax for federal and exempt on the state. Thus, we're unable to separate them in QuickBooks Online (QBO).

 

The following are the exempt health insurance in QBO:

 

  • FIT, SS.
  • Med, FUTA.

This is how they're reported on federal forms:

 

  • 941: Decreases boxes 2, 5a, 5c
  • 940: Box 4 and 4a checked
  • W-2: Decreases boxes 1, 3, 5

 

QBO calculates these taxes based on the reduced salary amount. Hence, it results in less income tax.

 

Check out the Pretax health insurance section of this article for more details about the supported pretax health insurance: Supported pay types and deductions.

 

Also, read through the Employees and payroll taxes section of this Community resources to learn more on how to manage payroll taxes: Community help articles.

 

Please let me know if you need more help with managing your payroll taxes or anything else related to QuickBooks. I'll be here to help you. Take care and have a great day.

DragonFin
Level 1

Set Up Pretax Aflac 100% Paid By Employee

Does QuickBooks allow you to set up the deductions for the first two payrolls of the month?

 

AlexV
QuickBooks Team

Set Up Pretax Aflac 100% Paid By Employee

I'm here to show you how you can add a deduction for the first two payrolls of the month, DragonFin.

 

When setting up a deduction, you have an option to select a limit type. This helps to determine how often you want to calculate it. From the Default rate and limit window, you can select Monthly - Restart each month if you're doing it monthly.Capture.PNG

 

You can follow the steps shared by Kristine Mae on how to add payroll deduction.

 

Another way is to manually add the deduction item when running payroll. Instead of adding it to the employee's profile to prevent it from auto-calculating, you can add it to the paycheck before saving it.

 

Run payroll as usual, then click the Open Paycheck Detail button. From the Other Payroll Items section, manually select the deduction you created.Capture.PNG

 

You'll want to check these links for more details:

I'll be here if you need more help. Wishing you all the best!

dgfranklin
Level 1

Set Up Pretax Aflac 100% Paid By Employee

IRS W-2 instructions indicate that pre-tax insurance premiums paid by both the employer and employee should be reported in box 12 with code DD.  Premium Only/125 tax tracking type for employee paid health insurance premiumsdoes is not included as required.  How can that be corrected?

Angelyn_T
QuickBooks Team

Set Up Pretax Aflac 100% Paid By Employee

Thank you for joining the thread, Franklin.

 

You need to update the tax tracking type linked to the pre-tax insurance item. This way, amounts are reported to the desired box. I'm here to guide you with the detailed process.

 

  1. Open your QuickBooks Desktop file.
  2. Go to the Lists menu, then click on Payroll Item List.
  3. Look for the item, then double-click the name to open the Edit payroll item window.
  4. Hit Next until you're routed on the Tax tracking type page.

 

Update the type from there so the premiums are reported in box 12 with code DD. Moreover, you can also contact your Health Insurance Administrator to determine the taxability of the item. 

 

Here's an article you can open to know more about setting up a payroll item for insurance.

 

After updating the item, you need to delete and recreate your payroll. This helps you update the amounts to the correct box/code. You can check out these articles under QuickBooks Desktop Payroll  for the instructions:

 

 

Moreover, you can skim through these articles to know more about the supported pay types and how QuickBooks populates the boxes on the IRS Form W-2:

 

 

Please let me know how else I can help you with your pre-tax deductions. I'm always here to help. Have a good one!

jgobbi
Level 2

Set Up Pretax Aflac 100% Paid By Employee

Is the AFLAC Pre-Tax Policy also exempt from SS and Medicate?

MarsStephanieL
QuickBooks Team

Set Up Pretax Aflac 100% Paid By Employee

Hi there, @jgobbi.

 

Yes, the AFLAC payroll item is exempted from Social Security and Medicare. As long as this payroll item is created properly, it will show these details on the federal forms:

  • 941: Decreases boxes 2, 5a, 5c
  • 940: Box 4 and 4a checked
  • W-2: Decreases boxes 1, 3, 5

To know more information about the deductions, you can check out this article: Supported pay types and deductions explained.

 

I'll be here if you have other questions. Please don't hesitate to let me know in the comment section. Take care!

Need to get in touch?

Contact us
Sign in for the best experience
Ask questions, get answers, and join our large community of QuickBooks users.
Sign In / Sign Up