NORTH CAROLINA W2/W3 does not match federal W2 in QB desktop enterprise.

Hi there, Catherineaxiom.

It’s important to note that your state W-2 does not necessarily have to match your federal W-2 in all cases. Certain fringe benefits or deductions are taxable at the federal level but not at the state level, or vice versa. This often results in discrepancies between Boxes 1 and 14, especially for items like S-Corp health premium payments.

Since it involves S-Corp health premium payments, these premiums are taxable to federal and state withholding but are exempt from Social Security, Medicare, and FUTA taxes.

To resolve these discrepancies and ensure your payroll setup is correct, follow these steps:

1. Click the Lists tab in QuickBooks Desktop.
2. Select Payroll Item List.
3. Locate the payroll item used for your health premium contributions.
4. In the Tax Tracking Type window:
   • Select SCorp Pd Med Premium if the 2% shareholder has the same medical insurance plan as all employees.
5. Click Finish after verifying or updating the setup.

After updating the tax tracking type, I recommend running a payroll checkup to ensure there are no errors or discrepancies in your payroll setup. This process will verify that the changes have been applied correctly and help identify any missing or incorrect calculations in your liabilities or tax setups.

If you find any discrepancies or errors during the payroll checkup, I suggest adjusting your payroll liabilities accordingly. This step will correct any outstanding overpayments or underpayments and ensure that all payroll liabilities are aligned with the updated tax tracking type for accurate reporting and compliance.

If you need further assistance with filing W-2c forms or making additional corrections, please consider contacting the QuickBooks Desktop Live Support Team.

Please leave us a response if you have other questions or concerns.

I don't think Intuit really understands the issue.  I have struggled with the federal box 1 and state box 16 mismatch due to S Corp medical since I began using QBDT in the 90's.  Since the amount on the tax return for state wages usually shows a reduced amount by the amount of S Corp medical, I guess it really doesn't make a difference.  The safest thing to do is file a correction with SSA after the fact.