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Set up and tax Personal Use of a Company Car (PUCC)

SOLVED•by QuickBooks•27•Updated 1 week ago

Learn how to report employee use a company car for personal reasons in QuickBooks Online Payroll and QuickBooks Desktop Payroll.

If your employees use the company car for personal reasons, it's called Personal Use of a Company Car (PUCC). PUCC is a non cash fringe benefit that counts as part of your employee's total income and should be taxed.

To learn more about these, and to determine the value of the PUCC check out IRS Publication 15-B or talk to your accountant.

Note: Not sure which payroll service you have? Here's how to find your payroll service.

Step 1: Set up PUCC payroll item

  1. Go to Payroll, then Employees.
  2. Select your employee.
  3. From Pay types, select Start or Edit.
  4. In the Additional pay types section, select Personal Use of Company Car.
  5. Enter an amount or leave it blank. If you do leave it blank, enter the amount as you run payroll.
  6. When finished, select Save.

There are two ways to set up PUCC.

Step 1: Set up a Company Contribution payroll item

  1. Go to Lists, then Payroll Item List.
  2. Select Payroll Item ▼ dropdown,then New.
  3. Select Custom Setup, then Next.
  4. Select Company Contribution, then Next.
  5. Enter the item name, such as PUCC, then Next.
  6. In the Liability account and Expense account fields, select the expense account that you want to track the item. Select Next.
  7. Select Fringe Benefits, from the Tax tracking type ▼ dropdown.
  8. Select Next twice, then Finish.

Step 2: Add the item to the employees profile

  1. Select Employees, then Employee Center.
  2. Double-click your employee’s name.
  3. Select Payroll Info.
  4. In the section for Additions, Deductions, and Company Contributions, under Item Name, add your PUCC payroll item.
  5. In the Amount column, enter the amount per paycheck to take out. In the limit field, enter the total premiums for the whole year.
  6. Select OK.

You'll need to set up 3 payroll items to create a zero net paycheck and account for the taxes.

Step 1: Set up a PUCC Company Contribution item

  1. Go to Lists, then Payroll Item List.
  2. Select Payroll Item ▼ dropdown, then New.
  3. Select Custom Setup, then Next.
  4. Select Company Contribution, then Next.
  5. Enter the item name, such as PUCC, then Next.
  6. In the Liability account and Expense account fields, select the expense account that you want to track the item. Select Next.
  7. Select Fringe Benefits, from the Tax tracking type ▼ dropdown.
  8. Select Next twice, then Finish.

Step 2: Set up a PUCC adjustment item

  1. From your Payroll Item list, select New Payroll Item. 
  2. Select Custom Setup, then Next.
  3. Select Addition, then Next.
  4. Enter PUCC Adjustment as the payroll item name, then select Next.
  5. Select Payroll Expenses, then select Next.
  6. Select Compensation as the tax tracking type, then select Next.
  7. Select Next twice, then Finish.

Step 3: Set up an employee advance addition item

  1. From your Payroll Item list, select New Payroll Item. 
  2. Select Custom Setup, then Next.
  3. Select Addition, then Next.
  4. Enter Employee Paid Tax advance as the payroll item name, then select Next.
  5. Select Payroll Expenses, then select Next.
  6. Select None as the tax tracking type, then select Next.
  7. Select Next twice, then Finish.

Step 4: Add the item to the employees profile

  1. Select Employees, then Employee Center.
  2. Double-click your employee’s name.
  3. Select Payroll Info.
  4. In the section for Additions, Deductions, and Company Contributions, under Item Name, add your PUCC payroll item.
  5. In the Amount column, enter the amount per paycheck to take out. In the limit field, enter the total premiums for the whole year.
  6. Select OK.

Step 2: Create a paycheck

Now it's time to add the PUCC amount to your employee's paycheck.

There are 2 ways to add fringe benefits to paychecks in QuickBooks Online Payroll.

If you track PUCC on your employee's regular paychecks

  1. Go to Employees, then Payroll Center.
  2. Select Pay Employees.
  3. Select Scheduled Payroll.
  4. Put a checkmark on the employee’s name and select Open Paycheck Detail.
  5. Enter the necessary payroll items in the paycheck details.  
  6. In the Other Payroll Items section, enter the PUCC payroll item and the amount.
  7. Select Save & Close.
  8. Select  Continue.
  9. Select Create Paychecks.

If your employee won't be paid the rest of the year

You'll need to create a zero net paycheck

  1. Create an unscheduled payroll.
  2. Select Open Paycheck Detail on your shareholder paycheck.
  3. Remove any earnings items. 
  4. From Other Payroll Items, select PUCC Adjustment under the item name. Enter the amount 0.01.
  5. In the next line, select the PUCC company contribution item. Enter the total amount of the premiums paid.
  6. In the next line, select the PUCC Adjustment item again. Enter the amount of -0.01.
  7. In the next line, select the Employee Paid Tax Advance item. Enter the total check amount in the employee summary box. The net amount should now be 0.00.
  8. Select Save & Close.
  9. Repeat these steps for any of your other employees if needed.
  10. If you use QuickBooks Desktop Payroll Assisted, send the check(s) to Intuit. 

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