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    Handle taxes on a fringe benefits adjustment check

    Article ID: 1002823

    Overview

    There are 2 ways of handling taxes on a fringe benefits adjustment transaction.

    Assumptions

    You need to create a fringe benefits adjustment transaction and need to know how to handle the taxes.

    Expected Outcome

    You will understand the 2 different ways of taking care of the taxes when creating a fringe benefits adjustment transaction.

    Details

    When you create a fringe benefits adjustment transaction, there is no pay available to cover the employee's taxes on the fringe benefits.

    You have 2 choices:

    Collect taxes from the employee

    Don't select the I will pay the employee's taxes checkbox.

    When you create your fringe benefits adjustment transaction, we will record the amount of the employee's taxes as a loan from you to the employee. You can collect the amount of the loan from your employee's subsequent paychecks by entering the repayment amount as an Employee Taxes Paid by Employer deduction.

    If your employee repays you outside of payroll, run a second check for a prior payroll with the amount of the repayment entered as a Reimbursement, no other wages, and enter the amount of the Employee Taxes Paid by Employer deduction.

    Gross up to pay the employee's taxes

    On the Fringe Benefits Adjustment page, click to select the I will pay the employee's taxes checkbox.

    We will increase the payroll taxes for you, the employer, accordingly, taking account of the gross-up required by the fact that the payroll taxes you pay for your employee are themselves subject to payroll tax. We gross up for percentage taxes that are deducted from the employee, such as Social Security and Medicare. We also gross up federal and state withholding (income) taxes for the Group Term Life Insurance (GTL) and Personal Use of Company Car (PUCC) fringe benefits.

    At this time, we don't gross up for withholding taxes on fringe benefits other than GTL and PUCC. If you need this type of gross up, contact Payroll Support for assistance.

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    Resources

    Most Used Forms

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    Payroll Tax Support

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