Yes! You can use AI to fill out Earnings and Deductions Quick Reference

S-Corporations often pay for health insurance for their >2% shareholder-employees, and a common error is treating this as a standard non-taxable employer contribution. As per the guide, this amount must be added to the owner's wages using specific codes like 'S-Corp 2% Medical Plan', making it taxable for federal income tax but not FICA. Failure to do so results in under-reported income and incorrect tax withholding, leading to potential penalties. To avoid this, administrators must use the specific S-Corp earning codes, and AI-powered tools like Instafill.ai can help validate that the correct codes are used for shareholder-employees.

A frequent mistake is setting up a pre-tax deduction (like 'Dental Pre-Tax') as a post-tax one, or vice-versa, which directly impacts an employee's taxable income. This error leads to incorrect tax calculations and withholding, affecting the employee's net pay and year-end tax liability. Always double-check the 'Pre-tax insurances' and 'Post-tax insurances' sections to select the correct deduction type based on the company's plan documents. Using an intelligent form filler can help flag inconsistencies between plan type and tax treatment.

The guide lists specific annual contribution limits for various retirement plans (e.g., 401(k), SIMPLE IRA). A critical mistake is failing to track an employee's year-to-date contributions and allowing them to exceed these IRS limits, which can result in excise taxes and complex corrective actions. To prevent this, payroll systems must be configured to automatically stop deductions once the annual limit is reached. When manually entering payroll data, tools like Instafill.ai can help by validating entries against these established limits.

Benefits like personal use of a company car ('Automobile Fringe') or Group Term Life Insurance over $50,000 are considered taxable income, but are often forgotten during payroll processing. This leads to under-reporting of income on the W-2 and insufficient tax withholding. It's crucial to use the correct 'Reported (not paid to employee)' earning codes to ensure the value is taxed without being added to the employee's net pay. This ensures compliance and accurate W-2s.

A common error is treating all expense reimbursements as non-taxable, ignoring the distinction between substantiated (non-taxable) and unsubstantiated (taxable) expenses. If an employee is reimbursed under a non-accountable plan, the amount is considered wages and is subject to all employment taxes. Classifying it incorrectly results in tax evasion and compliance risk. Always use the correct earning code based on whether the expense is substantiated under an accountable plan.

The guide lists multiple housing-related earnings with very different tax treatments, such as 'Housing (Taxable)', 'Housing - Clergy', and 'Housing - Non-Clergy'. A mistake is to use a generic code for all situations, which can lead to significant over or under-taxation for the employee. It is essential to carefully read the description for each code and apply the one that matches the employee's specific situation. If your payroll setup involves non-fillable PDFs, a tool like Instafill.ai can convert them into smart, fillable forms with dropdowns to ensure the correct code is selected.

The guide specifies that catch-up contributions for plans like 401(k)s are for employees aged 50 or older, with some plans having special rules. A frequent error is enabling catch-up deductions for ineligible employees or using the standard contribution code instead of the specific 'Catch-Up' code. This can lead to excess deferrals and plan compliance issues. Administrators must verify employee eligibility (age, service years) before assigning catch-up deduction codes.

Many earnings and deductions, such as 'Severance' or pre-tax benefits, note that 'State taxability varies.' A significant mistake is assuming the federal tax treatment applies universally, which can result in incorrect state (Box 16) and local (Box 18) wage reporting. This causes compliance issues with state tax authorities and incorrect withholding for employees. It is imperative to research and configure the specific tax rules for each state and locality where employees work.

The guide differentiates between earnings 'Paid to employee' and those that are 'Reported (not paid to employee),' such as the value of a fringe benefit. A common mistake is setting up a reported earning (like 'ER-Sponsored Healthcare') as a paid earning, which incorrectly increases the employee's net pay. This error disrupts payroll funding and employee compensation. Always verify the 'Paid/Reported' column when configuring a new earning code to ensure it functions as intended.

The guide contains specific codes for mandated leave, such as 'AR Employee Pay' (American Rescue Plan) or 'CA SPSL 22' (California Supplemental Paid Sick Leave). A common error is to categorize these payments under a generic 'Sick' code, which prevents proper tracking for tax credits and compliance reporting. Using the wrong code may also cause the amounts to be reported incorrectly on the W-2, such as by omitting a required Box 14 code. It is vital to use the specific codes provided for any government-mandated leave programs.