User Support Forum

We provide medical and dental benefits for our employees under the Section 125 Cafeteria Benefits plan. Under this plan, the employee pays for their benefits through a payroll deduction, but these benefits are paid for with pretax money. For example, if the employee's gross wages for a pay period are $950.00, and their medical and dental benefits deductions are $300.00, then their FICA tax is to be calculated on the difference, $650.00.

How would I set up the Item Descriptions so that:
(a) FICA taxes are calculated on the adjusted salary ($650 in this example); and
(b) The W-2 boxes 3 & 5 show the adjusted salary ($650 in this example)

Is there anything special that would have to be done on the Employee Pay Items window? Is there anything else that I should know to get this to work properly?

We are using PowerChurch V 10.4.

Thank you for your help.
Loraine

In version 11, all you have to do is add the cafeteria plan deduction and mark it as a pretax. It will adjust the W2 and 941 automatically.