Setup a benefit deduction on an employee profile:
You can add or remove a recurring benefits deduction by finding the employee's name in the Team Roster tab.
- Click on an employee's name.
- Navigate to the Job Details tab.
- Scroll down to the Benefits section.
- Click Add a Benefit to add a new benefit.
- Click on the pencil icon to edit an existing benefit.
Note: Benefit deductions are not paid out by Homebase. All deductions will remain in the company bank account, and you will be responsible for remitting them to the appropriate parties.
How are pre-tax benefits applied on payroll?
Pre-tax benefit deductions are applied in the following order:
- Section 125 benefits (identified as 125 in the benefit type during setup)
- Retirement benefits
- Other benefit types
Supported benefit types:
|
Value |
Description |
|
125 Medical |
A benefit belonging to a Section 125 Cafeteria plan that helps employees pay for qualified expenses related to medical care. |
|
125 Vision |
A benefit belonging to a Section 125 Cafeteria plan that helps employees pay for qualified expenses related to vision care. |
|
125 Dental |
A benefit belonging to a Section 125 Cafeteria plan that helps employees pay for qualified expenses related to dental care. |
|
125 Disability |
A benefit belonging to a Section 125 Cafeteria plan that helps employees cover premiums related to disability insurance. |
|
125 Accident |
A supplemental benefit belonging to a Section 125 Cafeteria plan that helps employees cover costs for emergency treatment covering injuries. |
|
125 Cancer |
A supplemental benefit belonging to a Section 125 Cafeteria plan that helps employees cover costs for financial and emotional support when dealing with cancer. |
|
125 Critical Illness |
A supplemental benefit belonging to a Section 125 Cafeteria plan that helps employees cover costs for life-changing illnesses and health events. |
|
125 Hospital |
A supplemental benefit belonging to a Section 125 Cafeteria plan that helps employees cover expenses not covered by major medical. |
|
125 Life |
A supplemental benefit belonging to a Section 125 Cafeteria plan that helps employees cover premiums related to life insurance. |
|
401(k) |
A 401(k) plan is a tax-qualified, defined-contribution pension account that provides for pre-tax retirement savings. |
|
403(b) |
A 403(b) plan is a retirement savings plan available to qualified non-profit groups. It has a tax treatment similar to a 401(k). |
|
457 |
The 457 plan is a non-qualified, deferred-compensation retirement plan available to employees of government and certain non-profit organizations. |
|
Roth 401(k) |
A Roth 401(k) plan is similar to the 401(k) plan, except employees contribute post-tax funds and can withdraw tax free given certain criteria. |
|
Roth 403(b) |
A Roth 403(b) plan is similar to the 403(b) plan, except employees contribute post-tax funds and can withdraw tax free given certain criteria. |
|
Roth 457 |
A Roth 457 plan is similar to the 457 plan, but allows employees to contribute post-tax funds and withdraw tax free given certain criteria. |
|
FSA Medical |
A medical flexible spending account (FSA) is a tax-advantaged account that allows employees to pay for eligible medical expenses. |
|
FSA Dependent Care |
A dependent care flexible spending account (FSA) is a tax-advantaged account that allows employees to pay for eligible dependent care expenses. |
|
HSA |
A health savings account (HSA) is a tax-advantaged medical savings account enrolled in a high-deductible health plan. Funds accumulate and can be used to pay for qualified medical expenses without tax liabilities. |
|
SIMPLE IRA |
A Savings Incentive Match Plan for Employees Individual Retirement Account (SIMPLE IRA) is a tax-deferred employer-provided retirement plan that allows employees to set aside money and invest it to grow for retirement. |
Special benefits scenarios - S-Corp Owner Health Benefits
S-corp benefits should not be added to an employee profile using the Benefits feature as described in this article. Owners or greater than 2% shareholders of s-corporations or LLCs taxed as s-corporations are not eligible for pre-tax benefit deductions or contributions from the company on payroll. Instead, the cost of the health coverage for the owner is logged as a taxable fringe benefit and subject to special tax reporting on payroll.
S-corp owner benefits are logged as taxable income for federal and state income tax, but are not taxable for FICA (Social Security) or Medicare taxes. As a result, s-corp benefits should only be reported in Box 1 and Box 16 on the owner's W-2. Additionally, the benefit amount is reported in Box 14 annotating the total amount of s-corp owner benefit logged.
At this time, Homebase does not support s-corp owner benefits being recorded on payroll directly or as a benefit on an employee's profile. However, if an shareholder or owner needs to record a benefit amount for annual reporting, please notify Homebase's Payroll Support team in the total amount for the year and our team will add the benefit amount manually to the company's tax record for the year.
S-corp owner status should be indicated on the employee profile on the Job Details page under Payroll Settings:
If this field is not completed, it does not block an employee from being included in payroll. However, to ensure accuracy of your payroll records, it's recommended to indicate the s-corp shareholder status for any owners as "yes."
Example order of operations for benefits deductions on payroll:
| $1,000 | Employee Gross Wage |
| - $200 | 125 Medical benefit deduction |
| = $800 | New taxable wage |
| - $24 | Simple IRA 3% = $800 * 3% |
| = $776 | New taxable wage |
|
- $50 |
FSA deduction |
|
= $726 |
New taxable wage |
To contact support, click here to log in or send us a message.
Still have questions? Feel free to reach out and we’d be glad to help!
