One final question and then I will put this to rest J where do I put this in quickbooks? On the first part which is earnings or on the second part labeled additions, deductions and company contributions?
According to my conversation with Katie, Denia was re-imbursed for health insurance premiums charged by the company’s health insurance provider. The laws governing Medicare premium re-imbursements are different. In Katie’s situation, she would need to pay Federal and State income tax and FICA on this re-imbursement. The question then is how much of the total amount does the company want to pay. Just the premium amount and Katie would not be reimbursed for income tax and FICA? The premium amount plus FICA but not her income tax? Or the full amount, Premium plus income tax, plus FICA.?????
My conversations with Katie indicate the company is willing to reimburse the full amount.
Here’s an example to use as a guide to figure what the gross amount should be:
Katie’s Medicare premium cost: $400
State estimated income tax at 5%: 20
Federal estimated income tax at 15%: 60
Total of premium and income taxes: 480
To add the FICA amount, divide 480 by .9235: 519.76
So in this example, if you pay Katie a gross amount of $519.76, you’d cover her Medicare premium, her Federal and State income taxes, and her FICA.
Let me know if you have any questions.
Thanks,
Maurice Gauthier
Amatics CPA Group
(406) 404-1925 ext 315
NOTE: Our offices are closed on Fridays through 9/1/23
Katie has been speaking to Morris and has admitted that she will have to take out taxes for the health insurance reimbursement. So now I need to figure that out. Would it be best to set her up as a 1099?
Susie
From: Susan Benson
Sent: Wednesday, August 23, 2023 4:29 PM
To: Christina Riekenberg <
Katie Lane is asking to be reimbursed for her Medicare. She wants Cok Kinzler to pay the taxes on the money she would get. She is asking to be reimbursed $445.00. Is there a way to do this. She spoke to Denia who was getting reimbursed and Denia doesn’t remember paying taxes or getting a 1099. I looked at Denias’s reimbursements and in Quickbooks it was listed on the memo as a Health Insurance Reimbursement. Denia got a flat $268.00 each month from Cok Kinzler. The expense item said 601-Operating Expense: 624-Insurance – Life & Health. I am reimbursing Mr. Cok each month $1,519.80 using expense item 309-Cok Capital: 310-Capital-Cok.
See below from our payroll department. Do you have a health reimbursement arrangement (HRA) set up for Cok Kinzler which is offered as a benefit to employees?