Is it correct to reduce Gross Wage for medical insurance withholding (such withholding being pre-tax) before applying IRS contribution percentage?

Hi, Leonard. Let me share information about the payroll tax calculation in QuickBooks Online (QBO).

Yes, the calculation is correct. All pre-tax insurance premiums are taken out first from the gross pay amount before other taxes and deductions. Your pre-tax medical insurance premium will be deducted from the gross wage first. Then, the IRA contribution percentage will be applied.

The system calculates payroll taxes depending on their setup. For more tips while setting up a retirement plan deduction or a company-match contribution item, check out these articles:

• Set up a Health Savings Account (HSA) item in QuickBooks Payroll
• Set up a retirement plan

If you need to know the year-to-date payroll amounts of your employees, you can run payroll reports from the Reports tab. You can also learn more about the lists of payroll reports available in QBO from this article: Run payroll reports in QuickBooks Online Payroll.

I'm always here if you have other questions regarding your payroll calculations. Just leave a comment below. Keep safe!