S Corop and payroll

[erchess]

I am reviewing my S Corp situation. The Officer / Owner who got paid received health insurance and pay and of course withholding for Federal and State Income Tax. They did their own payroll inhouse but they want me to do the W2. Now I have some concerns.

I can't see there FUTA and SUTA would show up on their copies of the forms I am looking at. Would they be on the Federal 941 or the NCESC Tax and wage report or on something else? What if I am right and these were not paid but should have been?

On thei8r 1120S I was going to lump everything the paid guy got on one line but now I am thinking there should be separate lines for the insurance, his gross pay, and the various taxes right?

[taxxcpa]

FUTA would be on Form 940. SUTA would be on the form used by the state to report the SUTA. I e-file SUTA for my clients on a site maintained by the TX Workforce Commission.

[Burke]

I can't see there FUTA and SUTA would show up on their copies of the forms I am looking at. Would they be on the Federal 941 or the NCESC Tax and wage report or on something else? What if I am right and these were not paid but should have been?

Taxcpa is correct. FUTA and SUTA don't show up on the W-2 because these are items paid solely by the corporation. Form 940 would be the reporting document for FUTA. States have their own. If they have been doing their own payroll, they should produce these for you for the 1120. But yes, I put only the salaries on the line for compensation on Form 1120 and show all the taxes paid on the line for taxes paid. There is a worksheet in my software where I break it all down by type of tax; I even separate current year and prior year for those types. For the health insurance, I include that with officers' compensation for more than 2% owners since it is in his/her W-2. Do not put under employee benefit plans unless it is for other employees where it is non-taxable.

[ChEAr$]

Also remember on the W2 box one includes health insurance but not in boxers 3 and 5. however the payroll plus health insurance appears in wages. This insures of course that social security records for federal taxables in boxes one coincide with 941's. BTW, the final 941 for the year should also include health insurance on line 2, but make sure on the social security lines it is not included.

[erchess]

Thank you

guys. I now have enough to run with.

[appelman]

Box 14

Also remember on the W2 box one includes health insurance but not in boxers 3 and 5. however the payroll plus health insurance appears in wages. This insures of course that social security records for federal taxables in boxes one coincide with 941's. BTW, the final 941 for the year should also include health insurance on line 2, but make sure on the social security lines it is not included.

Probably good idea to put health insurance of 2%+ owner in Box 14, labelled as such.

[NotEasy]

Probably good idea to put health insurance of 2%+ owner in Box 14, labelled as such.

I think the IRS instruction says health insurance paid by employer should go to box 12 with code DD. Is it because they are 2% owners so the health insurance should go to box 14 instead?

[NotEasy]

Also remember on the W2 box one includes health insurance but not in boxers 3 and 5. however the payroll plus health insurance appears in wages. This insures of course that social security records for federal taxables in boxes one coincide with 941's. BTW, the final 941 for the year should also include health insurance on line 2, but make sure on the social security lines it is not included.

I have also read another poster said before that the total health insurance of the whole year can be added to the final 941. Is this procedure allowed by the IRS? If yes, it is much easier than to report the health insurance in each of the quarterly 941 based on the amount actually paid in the corresponding quarter.

[geekgirldany]

I have several that I wait until the 4th quarter to report the shareholder health insurance. They are Quickbook users and only one has it setup correctly to calculate the health insurance through out the year. I've never had a problem with doing it this way so far.

[NotEasy]

I found a very concise and clear explanation about how the health related benefits of a 2% shareholder should be handled in the W-2 and various payroll forms. It even has box-by-box instruction on how the forms should be filled in. Hope this helps. But it is a PDF file and I had to download it first before I could read it. If someone knows how to read it without the downloading, please let us know.

http://www.google.com/url?sa=t&rct=j&q=2%25+shareholder+health+W-2+box&source=web&cd=4&ved=0CEoQFjAD&url=http%3A%2F%2Frmncpas.com%2F~rmncpas2%2Ffiles%2FS%2520corp%2520health%2520insurance%2520rules.pdf&ei=Nv7-UKnrPIeYiALQnYHoCg&usg=AFQjCNGUbZpUJr-Uk5hb2DkYj360XgTRPA&bvm=bv.41248874,d.cGE

[Burke]

I just clicked on your link and I could read it.

[NotEasy]

Oh well, for some reasons my PC would download the file every time when I clicked on the link. Maybe I need to change the setting of my browser.

[Burke]

I think the IRS instruction says health insurance paid by employer should go to box 12 with code DD. Is it because they are 2% owners so the health insurance should go to box 14 instead?

Yes, that is correct.

[cathe]

Box 12 DD

Just talked to the IRS about S Corp 2% owners and health insurance in regards to box 12 DD. They say no box 12 DD because that is specifically for untaxed health insurance, which does not apply in this case.

Cathe