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Add fringe benefits to paychecks

by Intuit•20• Updated 1 month ago

Learn how to pay and track fringe benefits on your employees’ paychecks in QuickBooks Online Payroll and QuickBooks Desktop Payroll.

To attract new team members to your business, you may want to offer benefits beyond health insurance and retirement.  Fringe benefits like mobile phone, internet, or gym allowances, lodging, meals, transportation (commuter), tuition, GTLI, PUCC, S-Corp medical are just some additional benefits you can provide. 

Fringe benefits can be cash or non-cash and have special reporting requirements. Most fringe benefits are taxable and need to be added to your employees’ paychecks and W-2s. Find out more about fringe benefits from the IRS. 

We show you how to set up and report fringe benefits on your employees’ paychecks.

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

Step 1: Add a fringe benefit pay type to your employee profile

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QuickBooks Online Payroll has several preset fringe benefits to choose from. Select the fringe benefit you want to set up and follow the instructions in that article. 

We don’t support other fringe benefits in QuickBooks Online Payroll. 

QuickBooks Desktop Payroll has several preset fringe benefits to choose from. Select the fringe benefit you want to set up and follow the instructions in that article.

If you have any other fringe benefits, follow these instructions.

  1. From Lists, select Payroll Item List.
  2. Select Payroll Item then select New.
  3. Select Custom Setup.
  4. Select either Company Contribution or Addition, and select Next.
    • Company Contribution: Adds the value of the fringe to be taxed but doesn't increase net pay.
    • Addition: Adds the value of the fringe to be taxed and increases net pay.
  5. Enter a name for this item and select Next.
  6. Select an Expense account and Liability account from the drop-down lists and select Next.
  7. From the Tax Tracking Type drop-down list, select Fringe Benefits and select Next.
  8. Select Next three times.
  9. Select Finish.

Step 2: Add the fringe benefit to your employee’s paycheck

The fringe benefit needs to be reported on a paycheck before the end of the calendar year so it can be taxed appropriately and reported on your employees’ W-2s. You may need to report large non-cash fringe benefits over several pay periods so you don’t negatively impact your employee’s net pay.

You can include the fringe benefit amount as you run your regular payroll, or create a Fringe benefit only paycheck.

Create a Fringe benefit only paycheck

  1. Go to Payroll, then Employees.
  2. From the Run payroll ▼ dropdown, select Fringe benefits only.
  3. Choose who do you want to pay the taxes, then select Continue.
  4. Select your employee, then enter the amount.
  5. Preview and submit payroll.

You can include the fringe benefit amount as you run your scheduled payroll.

QuickBooks Desktop Payroll AssistedQuickBooks Desktop Payroll BasicQuickBooks Desktop Payroll EnhancedQuickBooks Desktop Payroll StandardQuickBooks Online Payroll CoreQuickBooks Online Payroll EliteQuickBooks Online Payroll Premium

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