How to set up group-term life insurance and how to report the policy on a W-2 form

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SUMMARY
Issue

This article describes how to set up the group-term life insurance portion of an employee paycheck in Microsoft Dynamics GP. This article also explains that any policy amount of more than $50,000 must be reported on the W-2 federal income tax form for the employee.
MORE INFORMATION
Use the appropriate method to set up the group-term life insurance benefit.

Method 1

If the employee is paying federal income tax on a life insurance policy through payroll deductions, you must set up the benefit by following these steps:
  1. In the Benefit Setup window, create a benefit code. Make the code subject to the necessary taxes. This includes federal income tax.
  2. In the lower-right corner of the Benefit Setup window, type 12 in the W-2 box.
Search the IRS Web site for the correct W-2 type. Click the following link to visit the IRS Web site:Because the benefit is subject to federal income tax, the amount will automatically be added on the W-2 form to the amount in box 1, "Wages, Tips, and other Compensation."

Method 2

If the Employee is not paying the federal income tax on the life insurance policy, follow these steps:
  1. In the Benefit Setup window, create a benefit code.
  2. In the lower-right corner of the Benefits Setup window, type 12 in the W-2 box.
  3. Enter the appropriate W-2 label.

    Notes
    • Do not make the benefit subject to federal income tax. If you do not make the benefit subject to federal income tax, the benefit is not added to box 1 on the W-2 form.
    • Before you print the W-2 form, modify box 1 of the form to include a group-term life insurance amount of more than $50,000.
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Article ID: 865667 - Last Review: 12/29/2014 15:44:55 - Revision: 5.0

  • Microsoft Dynamics GP 2010
  • Human Resources
  • Integration Manager
  • Payroll - U.S.
  • kbnosurvey kbarchive kbmbsmigrate KB865667
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