entry for S corp owners health premiums

Thank you for posting here in the Community, @Peper.

Let me help you out with your confusion. I'll provide you with detailed information on the setup of an S-corp medical item and insights about payroll liabilities.

Depending on the plan you provide to your two percent shareholders and other employees, there are two tax tracking types for S-corps (from Step 1: Determine the plan your offer to your two percent shareholders). Both report in Box 14 of your employee's W-2.

To further understand S-corp medical payroll, you can read through this link: Set up an S-corp medical payroll item for your corporate officers.

Since you mentioned that it's now on Pay liabilities, it means the item was scheduled in Payroll setup (Change Payment Method) that shows what you owe on your agency for the S-corp, just like State and Federal taxes.

 The purpose of this is for tracking the liability payment in QuickBooks once paid in your agency.

For future reference, you can click this link if you want to successfully create and run payroll.

Please keep in touch with me here for any of your S-corp medical item-related concerns. I'm always here to lend a hand. Keep safe!

Thanks for adding info, @Peper. 

Let me help you out with this.

You can open the payroll item and edit the associated accounts.

Here's how:

1. Go to Lists.
2. Select Payroll Item List.
3. Find and double-click to open the information of the company contribution and deduction payroll item.
4. Click Next.
5. Review the expense and liability (company contribution) and liability (deduction) accounts of both payroll items.
6. Click Finish to confirm any changes you've made.

Additionally, I'd recommend consulting with your accountant in choosing an expense account. This way, we’ll ensure your accounts is well accounted for after you run your payroll.

If you don't have an accountant yet, you can have one. You can find an accountant near your place through this link: https://quickbooks.intuit.com/find-an-accountant/.

For complete details of tracking insurance premiums in QBDT, refer to this link: Record and allocate Prepaid Expenses.

Lastly, I've got you this helpful article for steps to resolve any instances that the payroll item is not calculated correctly as reflected on your employees' paycheck: QuickBooks Desktop calculates wages and/or payroll taxes incorrectly.

You can contact us anytime you have other concerns or questions about managing your payroll in QBDT. I’m just a post away from you. Keep safe and have a great day.

Hello, 

I use the s-corp 2% medical expenses as "Other Pay" when completing payroll in order for it to be placed on the W2 in the correct location.     Also, to reimburse myself as I pay it through the year and the corporation reimburses me via this payroll entry.

Question, should the dollar amount paid under the s-corp 2% be paid on the same check as the rest of the payroll or should it be paid using a separate check.

Hi All,

It looks like this question has been answered - I thought to revisit it with the exact steps that I use at year's end with the goal being to move the S-Corp officers health insurance premium to a W-2 and have it show on the Profit and Loss as an expense. I'm working in QB Online with QBO Payroll.

You may decide to set up the "S-Corp Health Insurance" payroll item first just so that it is ready when you need it. There are two steps to accomplish this:

1. Open the employee profile for the officer(s) in question, go to "pay types", and put a checkmark in the "S-Corp Owners Health Insurance" pay item (you will probably find this in the "common pay types" section). Click done and close out that screen.

2. Next you'll want to be sure that the pay type you just activated is properly mapped in payroll settings. To do that, click on the "Gear Icon" at the upper right of the screen and in the first column left, you'll see "payroll settings". Click on that and then scroll to the bottom of the page and find, "accounting". Click on the pencil icon at the right to open that set of options. Towards the bottom of that screen you'll see the S-Corp Health Insurance payroll item and to the right, the account (from your chart of accounts) to which it is mapped. In the past, QB only allowed that payroll item to be mapped to a liability account (and that's probably what you'll see there). If you prefer to map it to an expense account (which QB now allows), you may do so with the understanding that the JE (Journal Entry) you'll make at the end of these steps will be a bit different. I prefer the liability account, so after confirming the mapping (the payroll item is mapped to the "Payroll Liabilities: S-Corp Health Insurance" account, you can click done and close out that dialogue.

Because I am recording this to the W-2 only once per year, at year's end, the monthly health insurance monthly premium is recorded to the same liability account ("S-Corp Health Insurance Liability") detailed above. Each month, you'll see the "negative" amount in that account increase. When you're ready to move the amount out of that liability account (for me that's in December after the final premium for the year has posted to the bank account and I've run the final payroll), these are the steps that I take:

*Note: As the addition of the S-Corp Health Insurance amount will end up in a wage expense account, payroll typically increase the Federal Income Tax (FIT). If you don't want that increase (I don't), that's the reason for steps 1-3.

1. Run payroll without the S-Corp amount and check the FIT amount (note that amount).

2. Go back and add the S-Corp amount into the check (into the field specifically for that amount). This is the same amount that you'll see in the liability account.

3. Adjust FIT to match the normal payroll amount and run payroll.

4. At this point, if you check the liability account, it should be at $0.00.

5. The S-Corp amount will end up in wages and thus will show up on the W-2. You can run a PL or look at that account in the chart of accounts to verify.

5. Now, create a JE to move the S-Corp amount out of the Wages expense account and into the Officer Health Insurance expense account (if you haven't already created that account, do that first):

Debit (DR): Officer Health Insurance (the same amount that you entered on the check).

Credit (CR): Officer Wages (the same account in which the S-Corp amount ended up).

If more than one officer has health insurance premiums and you split up the total between their checks, be sure to use the total of the premiums (again the same amount that was in the liability account).

6. Lastly, run a Profit and Loss to check that the wages and health insurance expense are correct and that the liability account is at $0.00.

I hope this helps out - please reply back with any questions. Have a very Happy Holiday Season. 🙂