cancel
Showing results for 
Search instead for 
Did you mean: 
JKLENOBLE
Level 1

ERC ER Health Insurance on 941

Using Intuit Online Payroll, qualified employer paid health insurance on qualified wages are reported on the paycheck in the ERC ER Health Insurance box.  On the 941, this health insurance is flowing to line 21 qualified wages and Worksheet Step 3 line 3a (Qualified wages (excluding qualified health plan expenses) for the employee retention credit).  Shouldn't this insurance be reported on lines 22 and Worksheet Step 3 line 3b?

 

The IRS defines qualified wages as "qualified wages are wages for social security and Medicare tax purposes paid to certain employees during any period in a quarter in which your business operations are fully or partially suspended due to a government order or during a quarter in which your gross receipts (within the meaning of section 448(c) or, if you're a tax-exempt organization, section 6033) are less than 80% of the gross receipts for the same calendar quarter in calendar year 2019." 

 

I believe the health insurance should be coded to line 22 qualified health insurance and Worksheet Step 3 line 3b (qualified health plan expenses allocable to qualified wages for the employee retention
credit).  The IRS defines qualified health plan expenses as "amounts paid or incurred by the employer to provide and maintain a group health plan but only to the extent such amounts are excluded from the
employees' income as coverage under an accident or health plan. The amount of qualified health plan expenses taken into account in determining the amount of qualified wages generally includes both the portion of the cost paid by the employer and the portion of the cost paid by the employee with pre-tax salary reduction contributions. However, the qualified health plan expenses shouldn't include amounts that the employee paid for with after-tax contributions." 

 

Unfortunately, manual adjustments to the Form 941 are not allowed in Intuit Online Payroll so this issue cannot be manually overridden.

4 Comments
KlentB
QuickBooks Team

ERC ER Health Insurance on 941

Hi there, JKLENOBLE.

 

I can share some insights about how QuickBooks populates the lines on Form 941.

 

Line 21 is for the qualified wages for the ERC excluding the qualified health plan expenses allocable to these wages. The amount on this section is also entered on Worksheet 1, Step 3, line 3a. To calculate it, the total amount of Regular Employee Retention Credit and Overtime Employee Retention Credit will be summed up and then divided by 2.

 

On the other hand, line 22 is for qualified health plan expenses allocable to the qualified wages for the employee retention credit. The amount here will reflect the result when line 21 is subtracted from line 13d, the fully refundable tax credit.

 

Based on your situation, the paid health insurance should show up in line 22 since these are the expenses apportionable to the wages. To fix this, I'd recommend getting in touch with our Payroll Correction Team. One of our representatives will pull up your account in a safe environment and adjust the amounts on the form for you.

 

I'm also adding these articles to help manage and your quarterly tax forms in IOP:

 

If I can be of any additional assistance, please don't hesitate to visit us again here. The Community always has your back.

JKLENOBLE
Level 1

ERC ER Health Insurance on 941

Thank you KlentB for your reply.  I appreciate that you confirmed that employer paid health insurance should be coded to line 22 of the 941.  (By the way, the "divide by 2" only applies to 2020 as the 2021 rate is 70% (as opposed to 50%).

 

I did contact the Payroll Corrections Team, several times, and created several cases/tickets.  The Payroll Corrections Team advised that only pre-tax employee health insurance contributions are coded to line 22 and Worksheet Step 3 line 3b.  Employer health insurance is coded to line 21 and Worksheet Step 3 line 3a.

 

Additionally, the Payroll Corrections Team advised that they are unable to correct the 941 as they believe it is correct and follows Intuit's internal rules.  Then, they advised me to submit an amended 941 for each quarter that I believe it is wrong.

 

I explained the IRS instructions for the 941 for lines 21 and 22 and asked if they could reach out to the Engineering team who originally wrote the IT code that maps the figures so this issue could be corrected.  I am surprised that no one else is contacting Intuit with this same issue.

 

Are there any other steps I should take to get this issue fixed?  It seems ridiculous that we pay for Intuit and have to manually amend the returns because Intuit's IT coding is incorrect.

JKLENOBLE
Level 1

ERC ER Health Insurance on 941

Thank you KlentB for your reply.  I appreciate that you confirmed that employer paid health insurance should be coded to line 22 of the 941.  (By the way, the "divide by 2" only applies to 2020 as the 2021 rate is 70% (as opposed to 50%).

 

I did contact the Payroll Corrections Team, several times, and created several cases/tickets.  The Payroll Corrections Team advised that only pre-tax employee health insurance contributions are coded to line 22 and Worksheet Step 3 line 3b.  Employer health insurance is coded to line 21 and Worksheet Step 3 line 3a.

 

Additionally, the Payroll Corrections Team advised that they are unable to correct the 941 as they believe it is correct and follows Intuit's internal rules.  Then, they advised me to submit an amended 941 for each quarter that I believe it is wrong.

 

I explained the IRS instructions for the 941 for lines 21 and 22 and asked if they could reach out to the Engineering team who originally wrote the IT code that maps the figures so this issue could be corrected.  I am surprised that no one else is contacting Intuit with this same issue.

 

Are there any other steps I should take to get this issue fixed?  It seems ridiculous that we pay for Intuit and have to manually amend the returns because Intuit's IT coding is incorrect.

Maybelle_S
QuickBooks Team

ERC ER Health Insurance on 941

I want to ensure this is taken care of, @JKLENOBLE.

 

To fix this, I'd suggest contacting our Customer Support Team again. This way, they can pull up your account securely ad help fix the issue.

 

For additional resources, this guide contains information on how Intuit Online Payroll Enhanced and QuickBooks Online Payroll Enhanced handles the processing of tax returns: File quarterly tax forms.

 

The Community will always have your back if you need anything else in running payroll. Wishing you and your business continued success.

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