Supported benefits
QuickBooks Online Payroll supports the following benefits. Because the IRS allows you to update these amounts annually, you may decide to add the pay types at the end of the tax year.
Nontaxable Per Diem
Nontaxable Per Diem amounts are fixed, nontaxable daily allowances to pay for lodging, meals, and incidental expenses incurred during travel.
Typically, Nontaxable Per Diem is used in industries in which travel is part of the job, such as truck drivers. Because these payments are not taxed, they are not included in the pay base for calculation of percentage-driven deductions such as 401(k).
Nontaxable Per Diem is reported on Form W-2 and amounts appear in Box 12.
Personal Use of Company Car
Employees who drive a company-provided vehicle for personal use must report the taxable value of the benefit at least once a year. QuickBooks Online Payroll does not calculate the amount. To determine the value of the benefit, you should refer to Publication 15-B: Employer's Guide to Fringe Benefits.
When you determine the value of the benefit, we can include it on Form W-2.
Personal Use of Company Car (PUCC (car)) fair-market-value (FMV) amount is reported on Form W-2 and is included in Box 1, 3, 5, 16 and 18 wages. We will also print the value in Box 14 (PUCC (car)).
S-Corp Health
Company paid health insurance for 2% (or greater) owners of S-Corps. While S-Corp owners are generally considered employees for tax reporting purposes, the IRS has special rules for these individuals when it comes to Fringe Benefits.
Company paid health insurance is taxable for income tax withholding, but exempt from Social Security and Medicare. State taxation varies by jurisdiction.
S-Corp amount is reported on Form W-2 and is included in Box 1 wages and Box 16 (depending on the state) and Box 18 (depending on the local jurisdiction). We'll also print the value in Box 14 (S Corp Owner).
Group Term Life Insurance (GTL)
Company provided GTL is a non-taxable fringe benefit for coverage of $50,000 or less. When the company provides greater coverage, the value in excess of $50,000 is taxable and valued according to a specific IRS formula.
QuickBooks Online Payroll does not calculate the amount. To determine the value of the benefit, you should refer to Publication 15-B: Employer's Guide to Fringe Benefits. The amounts are reportable for federal income tax but not subject to withholding. However, they are subject to Social Security and Medicare for both. Employers who want to collect the FICA from employees need to process these entries with a regular paycheck that has enough net pay to cover the tax. State taxability for PIT and UI varies by jurisdiction.
Group Term Life (GTL) is reported on Form W-2 and is included in Box 1, 3, 5, 16, and 18 wages. We also print the value in Box 12 (Code C).
Contributions to an Health Savings Account (HSA)
Employer contributions (including salary reduction contributions made through a cafeteria plan) to an HSA on behalf of an eligible individual are excludable from gross income and wages for federal income tax withholding, Social Security, Medicare, FUTA.
They are taxable in some states and local agencies — as long as the employer reasonably believes at the time the contribution is made, that it will be excludable from the employee's income.
2% shareholders of S-Corps are not eligible to participate in pretax contributions to HSA plans and the employer contributions are treated as distributions (fully taxable).
Contributions to an HSA are reported on:
- Form W-2 — contributions to HSA are reported in Box 12.
- Form 940
- Some state forms — if your contributions are taxable at the state or local level, we include the amount in taxable state wages. California considers all HSA contributions as taxable
Benefits that aren't supported by QuickBooks Online Payroll
If you have other benefits that aren't supported by QuickBooks Online Payroll,
Third-Party Sick Pay
QuickBooks Online Payroll doesn't support the W-2 form and tax reporting required for third-party sick pay benefits paid to employees during the year. If you provide third-party sick pay to your employees,
Allocated Tips
QuickBooks Online Payroll doesn't support the W-2 form and tax reporting required for allocated tips paid to emploees during the year. If you pay out allocated tips to your employees,
W-2 Box 14 (other benefits)
QuickBooks Online Payroll reports some payroll items in W-2 Box 14 (clergy housing allowances, employee contributions to SUI and SDI, S-Corp owner health insurance amounts, and personal use of a company car). Other items, such as section 125 plan contributions, are not reported in W-2 Box 14.
Box 14 notations are not required by the Social Security Administration, but typically added for the convenience of the employee. If you want, you can add the items manually to the copy of the W-2 you give to your employees. You can still file Copy A electronically with the Social Security Administration from your QuickBooks Online Payroll account.