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Established Member

HSA Company Contributions

We are a small company of 40 employees.  I am on QB Desktop Enterprise in the Right Networks hosted environment.  We offered a HSA medical plan as of 6/1/19.  The company is going to pay out a contribution to employees participating in the HSA one time in June and one time in October.  I think I know how to setup the HSA Employer Contribution payroll item.  How do a pay the amount out from payroll liabilities through direct deposit to the employee's HSA bank account?  Is there another way I should be doing this to make it work for direct deposit?  Thanks.  

5 Comments
QuickBooks Team

Re: HSA Company Contributions

Hello bkinder,

 

Thank you for providing detailed information here in the Community. Allow me to help share information about the HSA employee deduction in  QuickBooks Desktop.

 

In QuickBooks, you can have the employee deduction (Health Savings Account) direct deposit directly into the HSA account without going through the Pay Liabilities window. You may need to create an addition payroll item first and choose Asset or Expense instead of a liability account.

 

For the detailed steps depending on the type of tax (pre-tax or taxable), I'm adding the support links I found helpful:

 

Feel free to get back to me if you need further assistance with the HSA deduction, such as the direct deposit process. The Community will be eyeing out on your response.

Established Member

Re: HSA Company Contributions

If I understand correctly, for the employee direct deposit, I'm creating an asset or expense item to offset their HSA deduction.  Is that correct?

 

So once I get that working, how does the company (employer) contribution work?  For example, if we (employer) are going to contribute $500 in June to the employee's HSA bank account, is there a way for me to direct deposit the employer contribution to the account?

 

Thank you again.  

QuickBooks Team

Re: HSA Company Contributions

Hey @bkinder,

 

You'll need to create a payroll item with an asset or expense account instead of a liability. Let me provide more details about this and help you further.

 

Creating a payroll item for the deduction allows you to pay it through direct deposit. But the payroll item should have an asset or expense account instead of a liability.

 

In addition, as mentioned by my colleague above, you can pay the deduction through direct deposit. But you'll first need to set up an Addition payroll item. Here's how:

  1. From selecting the account for the payroll item, choose an asset or expense account.
  2. Finish the setup.
  3. Click on Lists from the menu bar.
  4. Choose Payroll Item List.
  5. Select New from the Payroll Item drop-down.
  6. Click on Custom Setup.
  7. Choose Addition, then click on Next.
  8. Choose the expense account used for the contribution.

Then, follow these steps to pay through direct deposit:

  1. Click on Employees from the menu bar.
  2. Choose Employee Center.
  3. Select the employee.
  4. Click on the Payroll Info tab.
  5. Select Direct Deposit.
  6. Select Use Direct Deposit and Split Payment.
  7. Click OK twice to save your changes.

That's it! You can now pay the contribution through direct deposit.

 

You can refer to the articles provided by my colleague above for more information.

 

Please don't hesitate to get back to us if you have other questions. It'll be my pleasure to help you.

Established Member

Re: HSA Company Contributions

In June, I did a payroll run for HSA employer contribution to our employees. We paid out $500 each to 18 employees totaling $9,000. I created a payroll item called "HSA Employer Contribution" with a type of Company Contribution. I also created HSA Employee Contribution (deduction) and HSA Employee Addition (addition). The pay check detail for this run has the following: Earning: 0 (nothing picked), Other Payroll Items: HSA Employer Contribution $500 and HSA Employee Addition $500. Under Company Summary the HSA Employer Contribution of $500 shows. Under Employee Summary HSA Employee Addition of $500 shows, no taxes are taken out and direct deposit of $500 went to the employee HSA bank account. Net Pay shows $500. On the P&L for June under Payroll Expense there is $9,000 from the payroll run booked twice which is wrong. One is under HSA Employer Contribution and the other HSA Employee Contribution. It should only show under Employer Contribution for $9,000. How can I fix the paystub so that there is an offset to zero out the HSA Employee Contribution expense? Right now it's inflating the P&L by $9,000. I hope all this made sense.
QuickBooks Team

Re: HSA Company Contributions

Hello there, @bkinder.

 

I'd be glad to help share a way to offset the amount for the HSA contributions.

 

You can offset the amount by making necessary adjustments on your next-payroll run. Since you've used the HSA Employee Addition when running the payroll, you can offset the amount by selecting a deduction item (HSA Employee Contribution Deduction) under the Other Payroll Items section and enter the same amount under the Rate column.

 

Before doing these steps, you can have an internal agreement with your employee/s to make a deduction on the payroll on the next period.

 

You can see attached screenshots for additional reference.

k1 a.PNG

k1 b.PNG

You can also check our help articles in case you have any other QuickBooks or payroll concerns in the future: Help articles for QuickBooks Desktop.

 

Let me know if you have any other payroll payroll questions. I'm always here to help you!