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Set up and report Group-Term Life Insurance (GTLI) in QuickBooks
Group-Term Life Insurance is a benefit you can provide to your employees. If you pay more than $50,000 for a team member, the excess amount must be reported as income and is subject to Social Security and Medicare taxes.
Visit the IRS website to learn more.
What you’ll need
Knowledge of your specific payroll service type.
Total GTLI benefit amounts for affected employees.
Access to the IRS website for specific coverage guidelines.
| Note: Not sure which payroll service you have? Here's how to find your payroll service. |
Intuit QuickBooks Workforce
Set up a payroll item for Group-Term Life Insurance (GTLI)
Go to All apps
, then Payroll, then Employees (Take me there).Select your employee., then Job & pay.
From Additional pay types, select Add.
In the pay types dropdown, select Group-Term Life Insurance.
Add recurring amount, effective start date and effective end date (if applicable).
When finished, select Save.
Report GTLI on paychecks and federal forms
As you run your scheduled payroll, enter an amount in the GTL field. Or run a fringe benefits only paycheck. Here’s where they appear on federal forms.
Form 941: Reported in Boxes 2, 5a, and 5c.
Form 940: Reported in Boxes 3 and 4, with 4b checked.
Form W-2: Reported in Boxes 1, 3, and 5, with the dollar amount in Box 12 using code C
QuickBooks Desktop Payroll
Set up a payroll item for Group-Term Life Insurance (GTLI)
Use these steps to create a specific payroll item for GTLI contributions in QuickBooks Desktop Payroll:
Go to Lists, then select Payroll Item List.
Select the Payroll Item dropdown and choose New.
Choose Custom Setup, then select Next.
Select Company contribution, then choose Next.
Enter a name for the item and select Next.
Choose the liability agency name and enter your account number.
Select the correct Expense account from the dropdown and choose Next.
Set the Tax Tracking Type based on coverage:
None: Use this for the nontaxable portion (the first $50,000 of coverage).
Taxable Grp Trm Life: Use this for the taxable portion (coverage exceeding $50,000).
Select Next 3 times.
Leave the rate and limit fields blank and select Finish.
Report GTLI on paychecks and federal forms
Run your scheduled or unscheduled payroll. In the Other Payroll Items section, add the GTLI item and the amount.
Once you set up your items, you must report the amounts during your regular payroll runs. Here’s where they appear on federal forms.
Form 941: Reported in Boxes 2, 5a, and 5c.
Form 940: Reported in Boxes 3 and 4, with 4b checked.
Form W-2: Reported in Boxes 1, 3, and 5, with the dollar amount in Box 12 using code C.
Results
GTLI wages won't be taxed when they're added to paychecks. But they'll be reported as wages on tax forms, like 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.
Next steps
If you need to verify your data, you can run detailed payroll reports in both QuickBooks Online and QuickBooks Desktop Payroll.
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