Considerations

Current year reporting

If you need to report these benefits on the current year W-2, either enter this on a separate check or with other regular earnings.

FICA taxes

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

If this benefit is taxable for FICA taxes, it’s recommended that you enter this benefit with other Regular Earnings. 

If this benefit isn’t taxable for FICA taxes, you can enter these benefits on their own separate check. 

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 taxes don’t have a limit. 
• 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 the FICA/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 with your Tax Account regarding the tax exempt status of this benefit to all taxes. Usually, In/Out Pays are subject-to 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 using your normal procedures.

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. You’ll need to consider how to offset the tax amounts. If the employer is paying the FICA amounts on behalf of the employee, they can offset these amounts with a Reimbursement Pay type Pay id. If paying Withholding taxes on behalf of the employee, you can offset these amounts with a Reimbursement Pay type Pay id. If choosing to zero out Withholding taxes, the employee can make up any shortfall when filing their 1040 at the end of the year. For all other taxes (for example, SUI, SDI, PFL), you can offset these with a Reimbursement Pay type Pay id. As Always contact your Tax professional for guidance.
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.

 

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 taxes have no limit. 
• 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.