This feature offers you customer compensation codes that can benefit your employees.
The standard transaction type for Group Term Life [GTL] has a designation of Group Term Life Over $50,000 in the Vertex CMP Code field.
Below is the excerpt for GTL from the 2020 General Instructions for Forms W-2 and W-3 from the IRS website. https://www.irs.gov/pub/irs-pdf/iw2w3.pdf
“Group-term life insurance. You must include in boxes 1, 3, and 5 (or 14, if railroad retirement taxes apply) the cost of group-term life insurance that is more than the cost of $50,000 of coverage, reduced by the amount the employee paid toward the insurance. Use Table 2-2 in Pub. 15-B to determine the cost of the insurance. Also, show the amount in box 12 with code C. For employees, you must withhold social security and Medicare taxes, but not federal income tax.”
By law you must report the excess group term life over $50,000 [GTL] in Boxes 1, 3, and 5 of the W2. For Federal Withholding this is considered imputed income which by definition is to update taxable wages; do not calculate a tax. If an employee is paid $1000 of Regular Wages and $50.00 of GTL you would see $1050.00 in your Gross Taxable Wages for the Federal Withholding. However, the calculation of Federal Withholding tax would only be on $1000.00. For Social Security and Medicare Withholding you would calculate the tax on $1050.00.
The new transaction type will need to have its' Vertex CMP Code configured in the Admin Tools > Transaction Type > Detail tab.
Create a Group Term Life [GTL] Transaction Type
You will need to create a new transaction type to account for the GTL pay code that needs to be used. To create this new transaction type:
- Open Admin Tools > Transaction Type > Detail.
- Click Add New.
- Name this transaction type "Group Term Life" or something that will prompt users to understand it is for GTL over $50,000.
- In the Vertex CMP Code select Group Term Life Over $50,000.
- This will automatically set the pay code to Transactional.
- Select all the branches with which this deduction should be shared.
- Click Save.