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Set up and report Group-Term Life Insurance (GTLI)

by Intuit•8• Updated 1 month ago

Learn how to set up Group-Term Life Insurance (GTLI) in your QuickBooks Online Payroll and QuickBooks Desktop Payroll to report it on your payroll forms like W-2.

Group-Term Life Insurance is a benefit you can provide to your employees. If this benefit exceeds $50,000 for an employee, the excess amount must be reported as income and is subject to Social Security and Medicare taxes. Visit the IRS website to learn more.

Here’s how to report the Group Term Life Insurance amounts on your employees paychecks and tax forms.

Note: Not sure which payroll service you have? Here's how to find your payroll service.

Step 1: Set up a payroll item for Group-Term Life Insurance (GTLI)

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  1. Go to Payroll, then select Employees (Take me there).
  2. Select your employee.
  3. From Pay types, select Start or Edit.
  4. In Additional pay types, select Group-Term Life Insurance.
  5. Enter a recurring amount. Or leave it blank, then enter the amount as you run payroll.
  6. Select Save.

There are 2 tax tracking types you can use when you set up GTLI company contributions.

  • None is used for the nontaxable portion of the premium which pays the first $50,000 of the GTLI for any employee.
  • Taxable Grp Trm Life is used for the taxable portion of the premium which pays the excess over $50,000 of GTLI for an employee.
  1. Go to Lists, then Payroll Item List.
  2. Select Payroll Item ▼ dropdown, then New.
  3. Select Custom Setup, then Next.
  4. Select Company contribution then Next.
  5. Enter the item name. Select Next.
  6. Select the name of the agency to which liability is paid (or add it),  and the account number. In the Expense account ▼ dropdown, select the expense account that you want to track the item. Select Next.
  7. Set the Tax Tracking Type to Taxable Grp Trm Life (for taxable) or None (for non taxable). Select Next three times.
  8. Leave Default rate and limit fields blank. Select Finish.

Step 2: Report GTLI wages to paychecks and forms

How it's reported on federal forms:

  • 941: Boxes 2, 5a, 5c
  • 940: Boxes 3, 4, and 4b checked
  • W-2: Boxes 1, 3, 5 and $ amount in box 12 with code C

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As you run your scheduled payroll, enter an amount in the GTL field. Or run a fringe benefits only paycheck.

Run your scheduled or unscheduled payroll.  In the Other Payroll Items section, add the GTLI item and the amount.

Track GTLI wages

Note: GTLI wages won’t create additional tax withholding when included on paychecks, but will be reported as taxable wages on tax forms, such as Form W-2. Because of this, these amounts will appear as "Excess Wages" for Federal and State income tax on the Tax and Wage Summary report. These aren't true "Excess Wages". Refer to the "Total Wages" column for the total taxable wages.

If you need to track GTLI wages, check out Run payroll reports in QuickBooks Online Payroll and QuickBooks Desktop Payroll.

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