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IracemaC
January 9, 2024
Question

Paying Health Insurance Premium through Payroll Monthly for a 2% shareholder Scorp

  • January 9, 2024
  • 1 reply
  • 0 views

I am getting ready to run Payroll for the first time with the health insurance premium payment. I already picked S-Corp owners Health Insurance on Additional pay types. My question is does QOP automatically not collect FICA and FUTA taxes from the health Insurance premium payment? since my understanding is that even though is reported as additional wages it is not subject to those taxes. Also I been reading that many reported at the end of the year when they run their last payroll. Which one is better monthly when the company pays for it or all together at the end of the year? 

    1 reply

    R
    rvrfrf
    January 9, 2024

    Thanks for reaching out to the Community, IracemaC. I appreciate your detailed information.

     

    The insurance you offer your 2% shareholders and the rest of your employees determines the tax treatment for S-corp insurance. It will also determine if you can set it up in your payroll product and how to do it.

     

    If the 2% shareholders have identical medical insurance plans that are also offered to your other employees, the plan is subject to federal and state withholding. It's also exempt from Social Security, Medicare, and FUTA.

     

    In the event your 2% shareholders have a different plan from other employees, or you don't offer an insurance plan to employees at all, the plan is fully taxable. This type of plan is only supported in QuickBooks Desktop Payroll.

     

    You can learn more about this topic by checking out our Set up an S-corp medical payroll item for your corporate officers article.

     

    I'll be here to help if there's any additional questions. Have an awesome day!

    I
    IracemaCAuthor
    January 10, 2024

    Thank you for your answer. There is no other employees just the shareholder. My question is when I run payroll and add the Health Insurance premium amount to additional pay types in payroll does QBOP automatically tax correctly the health insurance premium amount? I also need to call to set that up.

    Nicole_N
    Nicole_N
    January 10, 2024

    I appreciate your follow-up on Paying Health Insurance Premiums through Payroll, IracemaC. Let me share additional details.

     

    In QuickBooks Online Payroll, when you add the health insurance premium amount in additional pay types, the system is expected to accurately calculate the taxes for the health insurance premium. QuickBooks Online (QBO) Payroll is equipped to manage different forms of compensation and should be capable of computing the correct taxes for health insurance premiums. However, it's always a good idea to double-check the settings and calculations to ensure accuracy. If you have any uncertainties, seek advice from a tax professional for further assistance.

     

    You can also reach out to our Payroll Support team so they can help you in setting up the payroll item. They can be reached using your QuickBooks account. Here's how:
     

    1. Go to the Help icon in the top right-hand corner.
    2. Select Search, then press the Contact Us button.
    3. Enter your question in the box and hit Continue.
    4. Choose the best way you'll want to reach out to us.

     

    Please check their availability to ensure you'll be addressed promptly. 

     

    I'm also adding this resource that might be useful if you want to run payroll reports in QBO to help you track your business: Run payroll reports in QuickBooks Online Payroll. The same resources give you details on marking a report as a favorite and customizing and printing reports.


    Please keep in touch if you have any additional S-corp medical item-related concerns. The Community team is always here to lend a hand. 

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