Apply S-Corp Medical at Year-end for Corporate Officers

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QB 2014/2016 Health Ins adjustment

If health insurance are subject to FIT/SIT, QB is NOT taxing it even though it's been checked 'on' in the settings.

Generally, the health ins premium is 'subject' to tax on Form 1040 but it's then deducted below on the same page, so it's not subject to tax. That applies to state returns.

Is QB 'correct' in NOT taking out any FIT/SIT?

Also, depending on how it's set up...

1. The liability account should be.... Contra account to the 'Insurance expense' to where the health insurance payments were categorized so it offsets the latter.

2. Expense account should be...
- I've seen 2 methods of categorization online at various online accounting/tax websites about this matter that it's confusing....
a) Wage expense - makes sense since health insurance is part of wages

b) Insurance expense - this negates #1 above but it also makes sense since 'some' people may want to 'track' the health insurance.
- The problem with this method is that the W-2 box 1 WILL have the health insurance amount so the Wage Expense account 'should' MATCH to the W-2.
- Now... the tax software entry is tricky... depending on which one the tax prof uses...
... One can use 2(b) but it won't match the W-2 and there's also a place to put the health insurance to the shareholder on a separate line. The issue is that the Wage amount will Not match the W-2 so that's a matching error there.
... If you use #1, then you'll need to leave a note on the K-1 on the health insurance amount or leave a note, possibly, alerting the shareholder of the health insurance amount on box 14, W-2.


Thanks!

MC 197 days ago

S-Corp Medical

We just worked through Option 1 today, using QB Desktop 2014. QB would not allow a zero check so we modified the above instructions by added .01 to wages. If we then deducted .01 from SIMPLE contributions then it allowed a zero check.
The other change we made was expensing the Insurance amount to Officers Payroll Expense instead of Payroll Expense. It appears all of the Year-end forms, Fed and State are correct!

Fay Uraynar more than 2 years ago

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