My business is currently setting up Employer paid Short and Long Term Disability (STD/LTD) benefits for its employees. When selecting the benefits package, the "Gross Up" option for these benefits was selected so that the Employees pay taxes on the premiums for these benefits now so that in the event there is a claim the benefits paid are tax free. How do I setup these payroll items within Quickbooks Payroll Desktop so that they are considered taxable items? It did not appear to be an option within the EZ Setup and it was unclear how to do this with the custom option.
Thanks in advance for the assistance.
Best answer August 17, 2020I can help you in setting up this item, smallbizcis.
Gross up disability plans are set up as basic (employer-paid) Short Term or Long Term Disability plans. Additionally, they look almost the same in terms of plan details as all other STD or LTD policies.
In most cases, the Tax Tracking Type of gross up disability plan is Compensation since the employer-paid premium is considered taxable income to the employee. This way, the benefits won't be treated as taxable income to the employee when it's paid through a claim,.
With traditional STD and LTD policies where the premium is paid by the employer, claims that are paid to the employee through the policy are considered taxable income.
Although, I would recommend consulting your accountant what tracking type you'll have to use to ensure compliance.
I also encourage reading these articles to help track, report, and create paychecks related to third-party sick pay:
If I can be of any additional assistance, please don't hesitate to insert a comment below. Have a great rest of the day.