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Report third-party sick pay to QuickBooks Desktop Payroll Assisted

SOLVEDby QuickBooksQuickBooks Desktop Payroll6Updated 2 days ago

Learn how to report third party sick pay in QuickBooks Desktop Payroll Assisted.

Third-Party Sick Pay is disability payments from an insurance company your employee gets while out of work, sick, or injured. To process third party sick pay with Assisted Payroll, you must send your info to us so we can collect any necessary taxes and report on tax forms including your employee’s W-2. 

Step 1: Verify the following information on the third-party report.

This information is required by the IRS for reporting purposes. If any of the information is missing from the third-party report, contact the third party to obtain it.

  • Employee's name
  • Employee's Social Security Number
  • Sick pay paid to the employee
  • Federal income tax withheld
  • Employee Social Security tax withheld
  • Employee Medicare tax withheld
  • State tax withheld
  • Federal Employer Identification Number (EIN) number

Step 2: Email or fax the third party report to Intuit.


What happens next?

Once we receive the info, you'll receive an email with what to do next.  We may need to collect the company portion of taxes from you (if applicable).

  1. Go to Banking then select Write Checks.
  2. In the Pay to the Order line, select QuickBooks Payroll Service.
  3. The Date of the check should be the date the bank account was debited.
  4. On the Memo line, enter Third-Party Sick Pay for Period MM/DD/YYYY (as indicated in the cover letter in the Amendment paperwork you received).
  5. Select the Expense tab.
  6. Depending on your payroll accounting setup:
    1. In the Account section, select Payroll Expense (or the appropriate expense account for the taxes being debited; this might be Payroll Expenses, Federal Tax Expenses, etc.)
    2. In the Amount section, enter the amount for taxes or total debit amount.
    3. In the Memo section, enter Third-Party Sick Pay.
    4. If you enter the amounts individually for Social Security Company, Medicare Company, Federal Unemployment Tax, State Unemployment Insurance, etc., you must repeat steps a, b and c for each item.
  7. Select Recalculate.
  8. Select Save and Close.
  9. Repeat Steps 1 through 8 if more than one debit has occurred. (Specifically, different debits for Federal or State taxes by QuickBooks Assisted Payroll service.)

Frequently Asked Questions

Check the contract you have with your insurance company to learn what taxes and forms they may pay and file.

  • W-2:  If the insurance provider prepares the W-2 the employee will receive it on or before January 31. If they don’t provide a W-2, Intuit will prepare a W-2C for your employee. You'll receive an email when we begin and it takes about 8-10 weeks to complete. You'll need to provide us with the annual explanation of benefits and the filing instructions from the insurance provider.
  • Federal & state tax payments: Often insurance companies pay the employee's part of Social Security and Medicare tax, but don't pay the employer's portion. Disability wages may also be taxable to federal unemployment or state unemployment. If there’s an amount due, we will debit and make the payments. Intuit will notify you via email 5 days in advance of any tax amounts to be debited. 
  • Federal & state tax forms: Amendments may be required for the 940, 941, and annual or quarter 4 state withholding or unemployment forms.
  • Short Term Disability is provided to employees during their first 6 months of disability. Short term disability is subject to federal withholding, social security, Medicare, and federal unemployment. State unemployment and state withholding taxability vary by state.
  • Long Term Disability is provided to employees after 6 months of disability. Long term disability is subject to federal withholding. It is exempt from all other federal taxes including federal unemployment. State unemployment and state withholding taxability vary by state.
  • Non-taxable Disability benefits are not subject to any federal or state taxes. Non-taxable Third Party Sick Pay wages can be paid during the first 6 months of disability, or after. Whether benefits are taxable or non-taxable is determined by the contract that you have with the insurance company.
  • FUTA/SUTA only disability wages have already had the employee and employer portions of social security and Medicare matched by the insurance provider. The insurance provider will also prepare the W-2 for the employee. The FUTA and SUTA reporting becomes the responsibility of the employer and Intuit will report on your behalf.

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