S-corporation medical payroll items

johnfilas · ‎December 20, 2019

Commencing in 2020, my company will cover the cost of health insurance for all employees and shareholders. As the owner, I am the only shareholder and I understand that the value of my health insurance benefits must be included in my wage. The insurance provider will automatically withdraw monthly payment from the company bank account for all employees' premiums, including mine. How would I set up the medical payroll items to reflect only one shareholder who is subject to social security, Medicare, and FUTA taxes, or federal income tax withholding and two employees who aren't?

MaryGraceS · ‎December 20, 2019

Hello there, @johnfilas.

There are two ways to set up S-corporation (S-Corp) medical payroll items in QuickBooks Desktop. It depends on the insurance program used in your company. To guide you which option to select, please refer to the following requirements, as well as the taxes affected per option:

If the shareholders participate in the same insurance program that is offered to all other employees, the cost of their premiums will be taxable only to FIT and SIT.
If the shareholders participate in a separate plan or do not offer the plan to their employees, then the cost of their premiums will be taxable to FIT, FICA, FUTA, SIT, SDI, and SUI.

You may use the following article about how to create the payroll item that applies to your corporation: Set up S-Corp.

Also, if you're are unsure how the item should affect taxes, tax forms, or calculated, I recommend you consult with your accountant for assistance.

Thank you for dropping by. As always, feel free to click the Reply button if you have any additional questions. I'll be happy to help you out.

johnfilas · ‎December 21, 2019

Thanks! I've seen a similar question and response, however I am still unsure of how I would go about separating my insurance cost from the employees' insurance cost. For example, let's say the insurance provider withdraws $1500 from the company account. Out of that $1500, my insurance costs only $500. I have to apply that $500 to my wage and it will be taxable. What about the remaining $1000? How would I go about splitting it between other employees?

GlinetteC · ‎December 21, 2019

Good to have you back, johnfilas.

You have the choice to divide the amount and tag how much you have to deduct from the employee's paychecks. In doing this process, you'll have to manually enter each amount from their paychecks.

Here are the steps:

Go to the Employees menu, and choose Payroll Center.
From the Pay Employees tab, select either Start Scheduled Payroll or Start Unscheduled Payroll.
Select the name of the employee and click Open Payroll Detail.
Under Other Payroll Items, enter the amount you wish to deduct.
Click Save and Close.

Please refer screenshots for your visual guide:

After performing the steps, you're now able to split the remaining amount successfully.

Keep me posted with the results. I want to make sure this is taken care of.

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S-corporation medical payroll items