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Training Tidbit: Is there a way to setup a payment-in-kind to track life insurance coverage over $50,000 for employees in Payroll?
Yes, a payment-in-kind can be defined in Payroll in order to calculate taxes on the life insurance coverage for employees over $50,000, using the rates set by the IRS for the cost per $1,000 of insurance coverage based on an employee’s age. Click here to access a handout with the detailed instructions for setting up a payment-in-kind for this purpose. Keep in mind, the instructions apply for employees if the life insurance is paid entirely by the employer and the life insurance amount provided to employees is based on their wages (i.e. life insurance coverage is equal to 100%, 150%, or 200%, etc., of an employee’s wages).
By completing the setup as described in the handout, the appropriate amount will be included in the employees’ gross for Social Security, Medicare, Federal Income Tax, and State Income Tax (if applicable) in order to calculate taxes.