Verify with your tax accountant if you need to report these benefits in boxes 1, 16 and 14. The following Instructions are for that specific scenario.

If you have questions about the exempt vs non-exempt status of these benefits, contact your tax accountant or review the IRS documents for W-2 reporting.

Considerations

Prior year reporting

If you need to report these benefits on the prior year W-2, enter the pretax benefit on a separate check. Don't include prior year pays on a current year check.

If you already closed the W-2 year: The check date must be in the prior year to post to the prior year and include the amounts in your W-2 totals.

FICA taxes

SOC, MED, MEDADDL, SOC_E, and MED_E taxes make up your FICA taxes.

If this benefit is taxable for FICA taxes, verify they met the limits for SOC, SOC_E, and MEDADDL taxes in the prior year.

If they met limits or the benefit will exceed the prior year limit, determine the appropriate tax amounts and enter those on the check. Contact your tax accountant if you have questions on this issue.

After posting the check and confirming if it met the limits, run the Recalculate Subject-to tool to correct the prior year Subject-to and Taxable amounts.

W-2 Boxes 1, 3, 5, 14, and 16

If you need to report this Taxable Benefit in boxes 1, 3, 5, 14, and 16, consider the following:

• Boxes 3 and 5 report FICA taxes. These taxes are self-adjusting taxes. The MED, MED_E, and MEDADDL taxes calculate if employees have a taxable amount over 200,000.00. SOC and SOC_E also need to calculate if the employee hasn’t exceeded the current year's subject-to.
• Don't zero out the FICA or MEDADDL tax amounts unless you're entering another check this year for that employee. If there’s another check, these taxes will self-adjust and calculate more taxes on the next check.
• We recommend that you enter this benefit with a regular check before the end of the reporting year. The correct amount of FICA and MEDADDL taxes will calculate, and they won't need to self-adjust.

Set up an In/Out pay

1. Set up your In/Out pay.
2. Check the boxes for all taxes except FWH and SWH. This benefit is subject-to withholding taxes.
3. Choose an option below to enter the pay.

Enter a check with other earnings

1. Go to Payroll, Tasks, Enter Checks.
2. Create a check with this pay and other earnings. The withholding taxes will be higher than a usual check.
3. Process and print the check with your normal procedure.

Enter a check with only this pay

1. Go to Payroll, Tasks, Enter Checks.
2. Enter a check with only the In/Out pay.
3. Click the Process button.
4. Uncheck all calculation frequencies. Only the taxes and deduction portion of the pay will calculate.
5. You’ll receive a warning about negative net pay. This is normal. Zero the amount that calculated for FWH and SWH taxes.
6. Click Process again with the frequencies unchecked.
7. Click the Manual button.
8. Enter a Check Number and a Check Date in the year you need to report the benefit for.

How do I enter taxable automobile, life, health insurance, or other benefit allowances so that they appear as part of the W-2 or T4 form?