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vpierson
December 27, 2021
Question

How do I record the employer taxes owed on disability insurance payments made to an employee?

  • December 27, 2021
  • 2 replies
  • 0 views
We have an employee out on short term disability. We are responsible for the employers share of Social Security and Medicare. How do I report that information to payroll so that it is included in our 941?

2 replies

R
rvrfrf
December 27, 2021

Thanks for becoming part of the Community, vpierson.
 

To allow taxes to be withheld from wages paid to employees, taxable third-party sick pay should be included with a regular paycheck whenever possible. If it's not possible, then an employee advance may be necessary to cover your taxes.
 

Initially, you'll need to create an expense account to track their sick pay.
 

Here's how:

  1. In the left navigation bar, go to Accounting, then Chart of Accounts.
  2. Click New.
  3. Use the Account Type ▼ drop-down list to choose an appropriate type.
  4. Utilize your Detail Type ▼ to specify a type that best fits the transactions you're wanting to track.
  5. Give your account a name.
  6. Add a description.
  7. If this is a sub-account of an existing one, tick the Is sub-account option and enter its parent.
  8. It's recommended to confirm your account matches its real-life counterpart. Afterwards, choose when you'd like to start tracking finances. In its Balance field, enter the amount in your account and determine its as of date. You can enter the current date if you'd like to begin tracking immediately.
  9. Select Save and close.

 

Next, you'll need to create an additional payroll item, a deduction item, and an employee advance.

 

If there's any questions, I'm just a post away. Have a wonderful day!

K
Ktranspinc
January 8, 2024

I also have the same problem. We do not pay the  short term disability out, another company does. But we are responsible for the employers share of Medicare and social security tax that was paid out, as well as reporting the income the employee received. How do I account for those taxes to match my 941 without creating extra liabilities?

S
ShyMae
January 8, 2024

Let me guide you on recording taxes in QuickBooks Desktop to match your 941 without creating extra liabilities, Ktranspinc.

 

Before anything else, you'll need to set the disability tax to the employee profile since this is included in their paychecks.

 

On the other hand, to record the taxes in QuickBooks Desktop, here's how:

 

  1. Enter the payment using the Enter Prior Payments option in the YTD Adjustment window:
  2. Select the Help menu. Then, choose About QuickBooks. And press Ctrl+Alt+Y.
  3. Choose the date range. Then select Next until you see the Create Payments button.
  4. Under Item Name, select the dropdown arrow. Choose the item you need to create a prior payment for.
  5. Verify the dates and update as necessary. Select Next Payment to enter another prior payment.
  6. Click Done.

 

The steps I've provided are for recording purposes only. I'd still recommend contacting your accountant for further advice. If you don't have one, you can find a professional through this link: https://quickbooks.intuit.com/find-an-accountant/. 

 

Furthermore, if you want to look closely at your business's finances, you can run a payroll report. It will provide a detailed summary of your company's payroll expenses, including employee salaries, bonuses, taxes, and other related costs. 

 

Just click the reply button below if you need further clarification about recording taxes. I'm still here to back you up, Ktranspinc.

R
Renee87
January 25, 2024

I have a similar problem. We do not pay the  short term disability, another company does and this company also pays the social security and Medicare tax. We are responsible for the Federal Unemployment and State (Virginia) Unemployment taxes. How do I account for these taxes?  I am using QuickBooks Desktop.

 

Thank you

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