HSA Employer Contribution Refund

tkshouston · ‎March 01, 2021

How do I process the bookkeeping for the refund of an Excess HSA Employer Contribution for the past calendar year? Details on our specific situation are as follows.

The Family maximum HSA contribution for 2020 was 7,100 dollars. An employee's wife maxed out his family's 2020 HSA contributions for the year through her own distinct employer, and then our employee had an additional 3,550 dollars deposited through us as an EMPLOYER HSA CONTRIBUTION. Now we have been requested to withdraw those excess funds from the employee's HSA account. We don't want those funds to become taxable salary for the employee for the past calendar year but instead simply returned to the company account. Upon request, the HSA financial institution already sent a refund check, which we just deposited into our business checking account. Now at this point, what are the steps I need to take to resolve the employee's payroll including their past year's W2?

AileneA · ‎March 01, 2021

Hi there, tkshouston.

Welcome to the Community. I'll be delighted to walk you through in processing a refund for your employee's over excess HSA contribution.

Here's how:

Select Payroll menu.
Click Employees.
Choose the employee's name.
Tap the Pencil icon beside Pay.
Under How much do you pay, select Add additional pay types.
Select Even more ways to pay drop-down, then select Reimbursement.
Hit Done.

The Reimbursement item appears in the Pay column when you create a paycheck for the employee once reimbursement pay type is added. The reimbursement won't affect the total insurance amount paid to your employee. And, this payment won't show up on the W-2 form since it's a non-taxable pay type.

Feel free to read this article for more information:

Fill me in if you have other questions about your HSA. I'd be around to help. Stay safe!

tkshouston · ‎March 03, 2021

Hi -

Thank you for the reply, but I think there may be some misunderstanding. This is not a reimbursement paid to the employee of something they've purchased. Instead, we (the employer) made an employer contribution to the employee's Health Savings Account (HSA). The Employer HSA contribution was in excess of the IRS maximum for 2020 (7100 dollars). Now we need to undo that in the bookkeeping somehow.

MarsStephanieL · ‎March 03, 2021

Hello there, @tkshouston.

I'm here to ensure that this is taken care of. You can create a deposit and use the account when paying the contribution to offset the amount. Also, I'd recommend contacting our Customer Care team. They have the tools to check the payroll adjustment entry and correct the payroll forms.

Here's how to contact them:

Go to the ? Help menu and enter a brief description of your concern about correcting the refunded HSA contribution.
Input "I need to speak to a human."
Choose the way to contact them if it's either messaging or callback.
Enter your details to get in touch with one of our payroll specialists.

You may also consider checking the support hours to know the best time to set an appointment in your convenience.

I've added an article for your future reference about tracking your business financials: Run reports in QuickBooks Online. This also contains sub-articles such as customizing and the different types of payroll reports.

I'll be here if you have other questions. Please don't hesitate to let me know in the comment section. Take care.

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HSA Employer Contribution Refund