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Intuit

Year-end report: Employee wages and benefits

Learn how to confirm an employee's wages and benefits for year end reporting.

At year end you should confirm that each employee's compensation, benefits, and withholdings are correct. We show you how. We also list the benefits your Online Payroll supports.

Verify compensation and benefits

It's important to verify, add, or update benefits before the end of the tax year. This ensures that it's correctly reported on year-end forms, like the employee's W-2 form.

Intuit Online Payroll

  1. Select the Employees tab.
  2. Select an employee from the list.
  3. Verify that the employee's pay types and benefits are correct. Make any necessary updates.

QuickBooks Online Payroll

  1. Go to the Payroll menu, then choose Employee.
  2. Select the employee's name.
  3. Select the edit (pencil icon) beside Pay.
  4. Verify that the employee's pay types and benefits are correct. Make any necessary updates.

Supported benefits

Your Online Payroll product supports the following benefits. Because the IRS allows you to update these amounts annually, you may decide to add the pay types at the end of the tax year.

A Nontaxable Per Diem is used mainly in industries where travel is part of the job, such as truck drivers. Because these payments aren't taxed, they're not included in the pay base for calculation of percentage-driven deductions such as 401(k).

Nontaxable Per Diem is reported on Form W-2. And amounts appear in Box 12.

Employees who drive a company-provided vehicle for personal use must report the taxable value of the benefit at least once a year. To determine the value of the benefit, you should refer to Publication 15-B: Employer's Guide to Fringe Benefits.

When you determine the value of the benefit, we can include it on Form W-2.  (Note: We don't calculate the amount for you.)

Personal Use of Company Car (PUCC (car)) fair-market-value (FMV) amount is reported on Form W-2. And is included in Box 1, 3, 5, 16 and 18 wages. We'll also print the value in Box 14 (PUCC (car)).

While S-Corp owners are generally considered employees for tax reporting purposes, the IRS has special rules for these individuals when it comes to Fringe Benefits.

Company paid health insurance is taxable for income tax withholding, but exempt from Social Security and Medicare. State taxation varies by jurisdiction.

S-Corp amount is reported on Form W-2. It's included in Box 1 wages and Box 16 (depending on the state) and Box 18 (depending on the local jurisdiction). We'll also print the value in Box 14 (S Corp Owner).

Company provided GTL is a non-taxable fringe benefit for coverage of $50,000 or less. When the company provides greater coverage, the value in excess of $50,000 is taxable. And valued according to a specific IRS formula.

Your Payroll product does not calculate the amount. To determine the value of the benefit, you should refer to Publication 15-B: Employer's Guide to Fringe Benefits. The amounts are reportable for federal income tax but not subject to withholding. However, they are subject to Social Security and Medicare for both. Employers who want to collect the FICA from employees need to process these entries with a regular pay check that has enough net pay to cover the tax. State taxability for PIT and UI varies by jurisdiction.

Group Term Life (GTL) is reported on Form W-2. And is included in Box 1, 3, 5, 16, and 18 wages. We also print the value in Box 12 (Code C).

Company contributions (including salary reduction contributions made through a cafeteria plan) to an HSA on behalf of an eligible individual are excludable from gross income and wages for federal income tax withholding, Social Security, Medicare, and FUTA.

They are  taxable in some states and local agencies. As long as the employer reasonably believes at the time the contribution is made, that it will be excludable from the employee's income.

Note Two percent shareholders of S-Corps aren't eligible to participate in pretax contributions to HSA plans. And the company contributions are treated as distributions (fully taxable).

Contributions to an HSA are reported on:

  • Form W-2 —  Box 12.
  • Form 940
  • Some state forms. If your contributions are taxable at the state or local level, we include the amount in taxable state wages. California considers all HSA contributions as taxable

Benefits not supported by your Payroll product

These benefits may require you to contact us for help with tracking and reporting.

Your Payroll product doesn't support the W-2 form and tax reporting required for third-party sick pay benefits paid to employees during the year. If you provide third-party sick pay to your employees, contact us.

Your Payroll product doesn't support the W-2 form and tax reporting required for allocated tips paid to employees during the year. If you pay out tips to your employees, contact us to make sure that the tips are reported correctly on the employees' W-2 forms.

Your Payroll product reports some payroll items in W-2 Box 14 (clergy housing allowances, employee contributions to SUI and SDI, S-Corp owner health insurance amounts, and personal use of a company car). Other items, such as section 125 plan contributions, are not reported in W-2 Box 14.

Box 14 notations aren't required by the Social Security Administration. But they're typically added for the convenience of the employee. You can add the items manually to the copy of the W-2 you give to your employees. You can still file Copy A electronically with the Social Security Administration from your Payroll product account.

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