QuickBooks Payroll Medicare Tax
With year-end tax activities on the go, gearing up for the new tax year is a crucial task for employers. There are some changes made on Federal payroll level recently and may potentially impact you. Know about QuickBooks Payroll Medicare Tax here so that you are able to plan your taxes accordingly.
Additional Medicare Tax QuickBooks
Medicare Tax Overview
Additional Medicare Tax was implemented as part of Affordable Care Act and is in effect since 2013. Under this order, in addition to withholding the Medicare tax, the employers must withhold extra Medicare Tax from paid wages of their employees once the earnings reach up to $200,000 in the calendar year.
As an employer you should have to know which kinds of QuickBooks Payroll Deductions should be applied during employee salary calculations .
As an employer, you are required to start withholding an Additional Medicare Tax in the Pay Period in which the employee wage reaches up to $200,000 or more and continue it on every pay period until you reach the end of the calendar year. The Additional Medicare Tax is imposed only on employees and not on employers.
Why Company Have to Add Medicare Tax QB
Medicare Taxes in QuickBooks Payroll
QuickBooks Payroll supports the additional Medicare tax through the addition of the latest payroll tax item: the Medicare Employee Addl Tax. It was included in the 2012 payroll update released. In case you have employees subjected to Medicare tax, even though their wages are not more than $200,000, you need to set up a fresh payroll tax item in your QuickBooks. So you can calculate Employee Salary Correctly in QuickBooks .
After setting up Medicare Employee Addl Tax item on your QuickBooks Payroll, you can rest assured: QuickBooks will start withholding whenever an employee becomes liable for the tax, and will track the wages amount reportable on the federal Forms 944, 943, and 941.
How To Set Up Additional Medicare Tax In QuickBooks
Setting up QuickBooks payroll tax item- Medicare Tax
Setting up new QuickBooks payroll tax item- Medicare Tax- is simple and must be done before creating any paychecks.
- Ensure you have downloaded and installed the latest QuickBooks Payroll Update.
- Go to Payroll Setup and close it to automatically set up the latest Medicare Tax and attach it on the existing employee tax records who are subjected to Medicare Tax.
- Set up Employee defaults to automatically attach the Medicare Tax whenever new employees are added subjected to Medicare.
Once the QuickBooks Payroll tax item is set, QuickBooks reports the Medicare Tax on Form 941 and will also be reported on Forms 943, 944, and W-2 if the Internal Revenue Service (IRS) requires reporting on these forms.