CenterPoint Payroll - Adding Life Insurance or Personal Auto Usage Amounts to the Employee W-2

Document #:	3052	Product:	CenterPoint® Payroll

The steps below identify the process to use if your accountant specifies that an amount needs to be added to an employee's W-2 for an employees use of a personal/company vehicle or for providing life insurance in excess of $50,000, after all payrolls are complete for the year.

These steps will not add any liabilities to your payroll. It is simply a way to reflect the amount in the employee history and their tax forms. If you are paying social security and medicare you will have to pay the employee and employer share of tax. The benefit amount will display on the employee W-2 and any state forms. The employee W-2 will also display the appropriate withholding amount.

After using this process, you will need to pay any additional amount for the employee/employer share of social security and medicare on your 941 Form.

Step A - Create an Earning

Step B - Create a Deduction

Step C - Add the Earning and Deduction to the Employee

Step D - Process a Startup Pay Run

Note: If your accountant provides you with the amounts prior to the last pay run being processed for the year, follow the same procedures, except include the earning and deduction in a normal pay run instead of a startup pay run (Step D). By including them as part of the last pay run of the year, the employee's share of payroll taxes for this benefit will be deducted from their pay check.

Step A - Create an Earning:

Select Setup > Payroll Details > Earnings. Click New.

Enter an appropriate Abbreviation and Name for this earning. In our example, we are using Auto Usage. Specify the appropriate Expense Account for this earning.
Select Regular Pay as the Type, and Fixed Rate as the Method. All other fields on the General tab can be ignored.
Select the Taxes tab. For Federal Withholding, State Withholding, Medicare and Social Security put a check mark in the Subject to But Don't Withhold column. The same thing should be done for any local (county, city, school district, etc.) taxes the employee would normally pay.

Click Save.

Step B - Create a Deduction

Select Setup > Payroll Details > Deductions & Benefits. Click New.

Enter an appropriate Abbreviation and Name for this deduction. In our example, we are again using Auto Usage.
The Type should be Other Taxable Deduction/Benefits. Select Employee in the Contributor field.
In the Liability account field, use the same expense account that was used in the setup of the Earning.
In the W-2 Box - Options field, select the Box specified by your accountant (For personal auto usage, box 14 is normally used. Box 12c can be used for Life Insurance in Excess of $50,000.).
The Employee Method should be Fixed Amount. All other fields on the General tab can be ignored.
Click Save.

Step C - Add the Earning and Deduction to the Employee

Select Setup > Payroll Details > Employees. Select an employee that needs either the life insurance or personal auto usage added to their W-2 and click Edit.
Select the Earnings tab.

In the lower left corner of the Earnings tab, select the Earning that was created in Step A. Leave the Rate at 0.
Select the Deductions & Benefits tab.

In the lower left corner of the Deductions & Benefits tab, select the Deduction that was created in Step B. Leave the Rate at 0.
Repeat steps 1-5 for each employee that needs personal auto usage or life insurance amounts added to their W-2.

Step D - Process a Start-Up Pay Run:

Select Setup > Payroll Details > Start-up Pay. Click on New.

Enter the appropriate Dates (Pay Period From, To, and Pay Date). These can all be set to 12/31/09 if you'd like.
Select the employee(s) you will be entering the personal auto usage or life insurance information for. Employees can be selected by moving them to the right using the green right-arrow button.
Click on the Pay tab.

Zero out any Salary Pay or other earning amounts.
Enter the Amount of the company car or life insurance in the appropriate Earning.
Double-click on Deductions to see all deduction details.

Zero out all deduction amounts displayed.
For the personal auto usage or life insurance Deduction, enter the same Amount that was entered for the Earning.
Click Save.