Learn how to set up and track S-corp medical contributions in QuickBooks Online Payroll and QuickBooks Desktop Payroll.
S corporation medical insurance is a noncash fringe benefit provided to shareholders owning 2% or more of the corporation.
You can set up an S-corp medical payroll item in QuickBooks Payroll. And report them on your employees paychecks and tax forms. To learn more about S-corp insurance, check out IRS Notice 2008-1.
Step 1: Determine the insurance plan you offer to your 2% shareholders
The insurance you offer to your 2% shareholders and the rest of your employees determines the tax treatment for S-corp insurance. It will also determine if you can set this up in your payroll product, and how to do it.
- If the 2% shareholders have the same medical insurance plan that’s offered to all your other employees, the plan is subject to federal and state withholding. Exempt from Social Security, Medicare, and FUTA.
- If the 2% shareholders have a different plan from other employees or don't offer an insurance plan to employees at all, the plan is fully taxable. This type of plan is only supported in QuickBooks Desktop Payroll.
Step 2: Set up your S-corp medical insurance item
Step 3: Report S-corp contribution on your paychecks
Now it’s time to run your payroll with an S-corp medical insurance item on it.