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Prepare form W-2

Shareholder/officer health insurance setup example

You can set up shareholder/officer health insurance in Accounting CS in a number of ways. The method you use depends on how you want the insurance amount to display on forms W-2, 940, and 941.
important
The following is 1 example of how to set up and process 2% shareholder/officer health insurance. This isn't the only way to handle shareholder health insurance for an S-Corp client. Before you follow these steps for your client, you should consult the appropriate resources to get more information.

Example details

This example assumes the following:
  • The shareholder health insurance amount should display:
    • in Box 1 of Form W-2 as FIT taxable wages.
    • on Line 2 of Form 941 as FIT taxable wages.
    • on Line 3 of Form 940 as FUTA wages.
    • as exempt on Line 4 of Form 940 as a fringe benefit.
    • in Box 14 on the W-2 form.
  • The health insurance amount is being recorded as a year-end adjustment.
  • The tax withheld amount on these forms won't increase.

Setup

  1. Select
    Setup
    , then
    Payroll Items
    .
  2. Enter
    2% Shareholder Health
     for the description and select
    Pay
     as the type.
  3. Select
    Fixed amount
     for the calculation type.
  4. Select
    Fringe benefits
     for FUTA exempt payments.
  5. Mark the
    Box 14 - Other
     checkbox and enter
    2% SH Health
     as the description.
  6. Mark the
    Amount from gross pay presentation
     and
    Net pay
     checkboxes for exclusions.
    note
    The checkboxes are marked assuming that the shareholder health amount shouldn't display in YTD gross and net pay when printing reports, and in gross or net pay on any paystubs.
    The amount will still display as taxable wages for FIT on the Payroll Tax Summary report.
  7. Select the
    Tax Exemptions
     tab and mark the
    All
     checkbox.
  8. Clear the
    Federal Income Tax
     checkbox. This lets only the federal income tax calculate for this pay item.
  9. Clear state and local withholding checkboxes.
  10. Select
    Enter
    .
  11. Select
    Setup
    ,
    Employees
    , then the
    Payroll Items
     tab. Mark the
    Active
     checkbox for
    2% Shareholder Health
     to turn on the new pay item.

Process

  1. Select
    Actions
    , then
    Enter Transactions
    . Add a payroll check for the shareholder dated 12-31-2022.
  2. Override the amount of the 2% Shareholder Health pay item with the total amount of the health insurance.
  3. Override any other pay and deduction items to $0.00.
  4. FIT will calculate for the payroll check. Override the amount to 0.
  5. Override state and local withholding amounts to zero, if necessary.
  6. Mark the
    Handwritten
     checkbox. This lets you finalize the check without printing.
  7. Select
    Enter
     to save the payroll check.

This article applies to:

  • Product: Accounting CS
  • Tax jurisdiction: Federal
  • Subject: Payroll checks,Payroll tax forms

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