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    Set up Sub S Medical insurance mid-year to reflect the entire year

    Article ID: 1000491


    Sub S Medical is an insurance provided for 2% (or more) shareholders of an S Corporation who are also employees. The corporation pays the shareholder's medical insurance, which is required to be reported in box 1 of Form W-2. The shareholder is responsible for paying State and Federal withholding.

    Expected Outcome

    Your Sub S Medical insurance payroll item totals will be correct for the year.


    You have already added the employee subject to this deduction in the Employee List.


    Create a Sub S Medical payroll item if one does not already exist.

    1. From the QuickBooks menu at the top, click Lists > Payroll Item List.
    2. Click the Payroll Item button, and then click New.
    3. Select EZ Setup, and then click Next.
    4. Click Insurance Benefits, and click Next to open the Insurance Benefits window.
    5. Select S Corp Medical under Other Insurance.
    6. Click Next.
    7. Enter the Vendor name, account number and payment frequency, if available, then click Next and Finish.
    If you would like to change the name of the item later (QuickBooks enters the name S Corp. Medical), double-click the name in the Payroll Items list, edit the name to one of your choice, and then click Continue until you can click Finish.

    Create a new Addition Payroll Item with a tax tracking of None.

    Create a new Deduction Payroll Item with a tax tracking of None.

    Change the liability account information to the expense account used in the addition item.

    From the QuickBooks menu at the top, click Employees > Pay Employees > Unscheduled Payroll.

    Enter the check date to match the date of the shareholder/employee's last paycheck of the year.

    Select the employee name and click View Paycheck Details.

    Enter regular earnings items and note the Federal and State withholding amounts.

    Remove the wage amounts from the Earnings window, and in the Other Payroll Item window, select the S-Corp Medical Insurance payroll item.

    Add the additional item you created in the Other Payroll Item Window of the paycheck for the amount of .01.

    Add the deduction item you created in the Other Payroll Item Window of the paycheck for the amount of -.01. The net amount of the paycheck should now be 0.

    Click Save & Close.

    Click Continue, and then Create.

    The employee will be responsible for paying any applicable taxes upon year-end tax filing.
    For more information regarding S Corp Medical insurance, see Payroll.com S Corp FAQ.

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