Hi, @jessica1265. You're on the right track! It's also important to understand how QuickBooks Desktop distinguishes between taxes and company contributions.
The difference is that QuickBooks treats Other Taxes as wage-based, with limits applied to total taxable earnings, while Company Contributions have limits based on the maximum amount the company pays.
For Other Tax items, QuickBooks uses the $184,500 wage base to stop calculating the percentage once an employee reaches that amount in gross pay. Since the Employer Pick-Up is a Company Contribution (fringe benefit), the system requires a dollar cap. Entering $1,489.19 instructs QuickBooks to stop contributing once that specific annual amount is reached.
Since Washington now treats employer-paid premiums as a taxable fringe benefit, ensure the contribution is set to track as taxable income for both Federal and State purposes in the Taxable Compensation window. Additionally, verify that the item is mapped to the correct expense account to ensure accurate reporting.
If you're unsure of which account to use when mapping the item, I recommend working with an accountant. This way, they can provide other options that suit your current setting, while keeping your recordings on point.
Moving forward, note that the Washington wage base typically changes every January 1st. You will need to manually update both the $184,500 wage base on the tax items and your calculated $1,489.19 limit on the contribution item at the start of each new year.
Feel free to click the Reply button if you have other questions about QuickBooks.
