Hello there, @TammyM12.
Once HSA is part of a cafeteria plan (Section 125), you'll have to set it up as a pre-tax deduction separate from any cafeteria plan. Pre-tax deductions are exempt from federal taxes but are taxable in some states and local jurisdictions.
I'd recommend verifying the HSA setup into your client's account. This way, you're able to verify that it's created accordingly. Here's how:
- Go to the Lists menu.
- Select Payroll Item List.
- Double-click the HSA to pull-up its details.
When there's a need to correct employees’ year-to-date (YTD) or quarter-to-date (QTD) payroll info, you can create a liability adjustment. You can refer to this article for the step-by-step guide: Adjust payroll liabilities in QuickBooks Desktop.
Once done, I'd recommend pulling up a payroll summary report. This will let you get a quick view of your client's payroll totals, including employee taxes and contribution. You can check out this article for the detailed steps: Create a payroll summary report (QuickBooks Desktop section).
Please know that you're always welcome to comment below if you have other concerns or follow-up inquiries about managing HSA contributions in QBDT Payroll. I'm just around to help. Take care.