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wlmchem1
October 15, 2022
Question

How to pay Wage for( S-Corp 2% Self-paid, Fully Taxable Health Insurance) using Online Payroll

  • October 15, 2022
  • 1 reply
  • 0 views

Company does not provide insurance for employee. So 2% shareholder bought an insurance by himself. The company need to pay wages for the insurance to get deducted in their personal tax return. 

 

In this situation, as company does not provide insurance, it is fully taxable(Federal, Social Security, Medicare, and FUTA). As company does not pay for the insurance, and the owner pays using his/her own money. How to do payroll and get the employee reimbursed using Online Payroll.

 

It looks that it is just like a regular pay (fully taxable).  Online Payroll provides "Other earning type", this type is fully taxable.   

 

(1)Can we create an "other earing type" to increase their wage for the self-paid insurance? For example, an "other earing type" is created using the name "Fully taxable S-Corp 2% Shareholder Health Insurance". Then we enter the health insurance premium when running payroll.

 

(2) If the above is correct, will the "Other earning type" appear in Box 14 when issuing a W2 at the end of the year.

1 reply

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Archie_B
October 18, 2022

Thanks for reaching us and providing us with details, wlmchem1.

 

I'm here to share additional insight into this S-Corp Health Insurance concern.

 

You're correct. The plan is fully taxable if the 2% shareholders have a different plan from other employees or don't offer an insurance plan to employees at all. But only QuickBooks Desktop Payroll supports this type of plan.

 

In QuickBooks Online Payroll, we can only set up the S-corp item for shareholders that have the same medical plan offered to all other employees.

 

Here's an article for more information: Set up an S-corp medical payroll item for your corporate officers

 

I recommend consulting an accountant so they can give you the best option in recording S-Corp in QuickBooks Online Payroll. You can find an accountant near your place through this link: Find a Certified ProAdvisor.

 

Please let me know if you have follow-up questions about S-Corp. I'm always here to help. Have a great weekend!​​​​​​​

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wlmchem1Author
October 18, 2022

Thanks for your reply. We really hope that the Online Payroll provides more customized items like Desktop version, as intuit gradually stops to support the old desktop versions and push people to go online. 

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    Tikipad2003
    January 25, 2024

    It completely blows my mind that QuickBooks Online Payroll does not abide by IRS tax rules regarding fully taxes 2% Shareholder Insurance. We have to change payroll services because they do not, and their customer service is a joke. Hours on the phone for the 'tax rep' to not have one clue what he was doing. 

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