employee pretax hsa contributions with direct deposit

@forzalazio Great question. Here's an article with steps to take to add/modify deductions for employees wanting to contribute to your HSA plan. You will need to select the payroll service you are signed up with and follow the instructions given. Please let us know if you need additional guidance to get setup.

Set up voluntary deductions in Online Payroll

I have desktop edition and prepare payroll myself

@forzalazio Thank you for clarifying on the product you are using. I have found the correct article to help you set that up in QuickBooks desktop payroll.

How to set up the tax tracking type HSA Emp. (Pre-tax) for employee contributions to health savings ...

I have an employee that wants to contribute to his personal hsa how do I set this up where when I run payroll it automatically puts money into his hsa account

I'm here to help you, @Snowden.

Let's first create a pretax employee deduction HSA payroll item:

1. Go to Lists then Payroll Item List. Click the Payroll Item button and choose New.
2. Select Custom Setup and Next.
3. Choose Deduction and select Next.
4. Enter the name of the item and click Next.
5. Pick the Liability account and Next.
6. Set the Tax Tracking Type as HSA Emp. (Pretax) and select Next.
7. From the Taxes window, select Next.
8. In the Calculate based on quantity window, choose Neither and select Next.
9. Input a Default rate and limit, if applicable. Otherwise, leave the default rate and limit blank and enter the rate and annual limit in the individual employee's Payroll Info window.
10. Hit Finish.

Then, to have the HSA employee deduction deposit directly into the HSA account, please follow the detailed steps in this article: How to set up the tax tracking type HSA Emp. (Pre-tax) for employee contributions to health savings ...

Also, here's a helpful article that will help you in case you want to correct year-to-date (YTD) additions or deductions on a paycheck: Correct year-to-date (YTD) additions or deductions on a paycheck when the wrong tracking type was us...

If you need further assistance about setting up HSA contributions for your employee in QuickBooks, please post a reply below. I'm always around to help. Have a good one. 

With regards to your Step #1: where is the "Lists" and "Payroll Item List" that you mention? 

With regards to your Step #1: Where do I locate the "Lists" and "Payroll Item List" that you mention? 

Good afternoon, @eabarrett87. 

Thanks for joining in on this thread. I appreciate you coming here with your question. 

Here's a visual of where the step is in your QuickBooks Desktop (QBDT) account:

Let me know if you need help locating any other step from my colleague's post above. I'm only a post away if you need me. Have a fantastic day!

Is this the process for Quickbooks Desktop only? Or is this possible for Quickbooks Online? 

Hi @eabarrett87,

Yes, it's also possible to set up a pre-tax HSA employee contribution in QuickBooks Online (QBO).

Let me show you how:

1. Highlight the Payroll tab.
2. Choose Employees.
3. Select the employee's name. 
4. Tap the Edit (pencil) icon beside Pay.
5. In section 4, click the + Add a new deduction link. 
6. Set the drop-down menus as follows:
   • Deductions/contributions 
   • New deduction/contribution
   • HSA plans
   • Pretax HSA
   • Add a Description and Amount per pay period 
7. Press OK. 

See this article for additional information about HSA in QBO: Set up Health Savings Account (HSA) plans. 

In case you want to set up voluntary deductions, check out this article for the steps: Set up voluntary deductions in Online Payroll.

Please feel free to drop a comment below if you have other questions about HSA contributions in QBO. I'll get back to you as soon as I can. 

The link for instruction on setting up the direct deposit is broken. Can you send a working link? Thank you

https://quickbooks.intuit.com/learn-support/en-us/other-payroll-additions-or-deductions/how-to-set-u...

Thank you for joining the thread, @BrettERG.

I'll be willing to assist you today.

To set up direct deposit for your company, you'll need the following information:

• Business name, address, and EIN
• Principal officer's social security number, birth date, and home address.
• Online bank credentials or bank routing and account number.
  
  

Next is, to connect your bank account:
 

1.  Select Employees, click My Payroll service, then Activate Direct deposit.
2. Click Get Started. If you don't see the Get started button:

• Select I'm the admin, and I'm the primary person who can... and enter the admin's email address or user ID.
•  Select Continue.
•   Enter the email or user ID and password for your intuit Account, then select Sign in. If you've already signed into your Intuit account somewhere else in QuickBooks you won't see this screen.
•    Click Get started.

    3. Click Start on the Business tab and fill in the information. Select Next.

    4. Fill in the Principal officer information. Select Next.

    5. Click Add new bank account.

    6. Enter the name of your bank and enter your online bank credentials or if prompted, your bank routing and account numbers.

    7. Create your PIN. You'll use this when sending your payroll to us each time. Confirm your PIN twice, then select Submit.

    8. Click Next, then Accept and Submit.

    9. Confirm the Principal officer's full social security number, if prompted. Select Submit.

            One of the following messages will be prompted:

• Your bank account is connected. This means you are ready to pay your employees by direct deposit right away.  Check Step 4: Set up your employees' bank information.
• Thank you for signing up for QuickBooks Direct Deposit. What’s next to activate Direct Deposit? This means you have a few more steps to connect your bank account. See Step 3: Verify your bank account.

For further steps in setting up direct deposit, you can click this link: Set up your company payroll for direct deposit.

You can click this link if you want to learn how to verify your bank account for payroll.

Click the Reply button below if you need additional assistance in setting up direct deposit in your account. I'll be willing to help. Have a good one!

What I'm looking for is how to send the HSA payroll deduction to the employees HSA bank account. Essentially, you'll have 2 direct deposits for the payroll, 1 for the HSA deduction and 1 for the balance of their pay.

I am also in need of this information. It is simple to set up a deduction from an employee's paycheck, but then it goes into an account in QB. How do I pay that deduction to the employee via Direct Deposit.

IE. I have an employee that wants me to put $10 from each paycheck into their pretax HSA account. They already have a checking account and savings account set up in Direct Deposit. Once I withhold the $10 from their paycheck, how do I get them the $10 into their HSA account directly?

Thanks for checking in with us, aitchdub.

I'd be happy to walk you through the steps of depositing an employee's HSA deduction into their HSA account. Follow the steps below:

1. Go to Lists, then Payroll Item List.
2. Select Payroll Item and select New.
3. Tap Custom Setup and select Next. Select Addition and select Next.
4. In the Expense account, select the same account used when creating the HSA item. Select Next.
5. Set the Tax Tracking Type to None. Select Next.
6. In the Gross vs. Net window, select Net pay and select Next then Finish.
7. From the Employee Center, double-click the employee affected.  Select Payroll Info. Select Direct Deposit.
8. Select Use Direct Deposit and Split Payment.  Enter the following:
   • Deposit Portion of Payment: enter the amount of the HSA to be deposited and the HSA Bank, account, and routing information.
   • Deposit the Remainder: enter the employee direct deposit information.
9. Select OK twice to save your changes.
10. Next time you pay the employee, the following should be on the paycheck:
    • The HSA deduction item for the employee
    • The Addition item - in the Rate column enter the HSA amount (the same amount as the HSA deduction item).
    • In the Employee Summary there should be two Deposits to transactions listed.  The one to the HSA account should match the HSA deduction amount.

For more information on handling HSA deductions in QuickBooks, please see the following article: Set up a Health Savings Account (HSA) item in QuickBooks Payroll,

Please let me know if you still need assistance with HSAs or other payroll issues in QuickBooks. Today, I'll be your helping hand. Have a wonderful day.

Hello,

In the current online version of Quickbooks, this flowchart doesn't work because there is no "Payroll Item List" under the lists menu. How do we go about depositing an HSA contribution into an employee's personal HSA account?  Currently, if you set up more than one account for Direct deposit, it makes those deposits from Net pay.  The HSA contribution is a pretax deduction and should come out of Gross pay.

Hello there, hilo0003.

You may be experiencing some file issues. Thus, the Payroll Item Lists is unavailable on your end.

Here's how to run the verify and rebuild steps:

1. From the File menu, select Utilities. 
2. Hit Verify Data.

If you see a specific error message, you may search for it on our QuickBooks Desktop support site for specific instructions. If the system prompts you with Your data has lost integrity, indicates there is data damage in the file. With that, you'll have to rebuild the file.

For more information on handling HSA deductions in QuickBooks, please see the following article: Set up a Health Savings Account (HSA) item in QuickBooks Payroll,

I'll be around whenever you need help.

Hilo0003,

I was able to figure out my issue, and it sounds like you're having the exact same one. Here is the solution I came up with and it has worked like a charm. When you set up the deduction in your Payroll for QBO, QB will automatically create a Payroll Liabilities account for this (just like it will automatically create a "Reimbursement" account if you want to reimburse your employees for expenses via payroll). You'll be able to access these in the "Accounting" tab in your Chart of Accounts.

Go to Payroll. Click on the employee you'd like to add an HSA deduction for. Scroll down to Deductions & Contributions. Click "Add Deduction/Contribution". Select "HSA (pretax)" (you may have to click the plus sign and add a new deduction if this is the first time." For this example, we'll say you set up a $25 deduction.

Set up the deduction and then run payroll like normal. You'll have to set up their HSA account in Direct Deposit as their 1st account listed so you can specify the $25 amount (putting the remainder of their pay into the 2nd account, which will most likely have been their main account assuming they only had one set up prior).

When your payroll processes, you'll see the payroll amounts pop up like usual in your "Banking" section to match. HOWEVER, instead of simply "matching" the amount, you'll select "categorize" and select the "HSA (pretax)" account that QB created automatically as a sub-account of Payroll Tax Liabilities. Boom, you're good. Your employee get's their money directly in their account through Direct Deposit (pre-tax). It'll add that $25 to the "HSA (pretax)" account under the "increase" column. When you categorize that payment (as opposed to matching like usual), it will deduct $25 from that account in the "decrease" column. Make sure to include your employee in the "Payee" field so that as you have more employees using HSA deductions, they are easily trackable and not confused with each other.

I hope this helps!! 

Hi,

I believe the solution you are providing is for QB Desktop. I have QB Online and cannot get into the "list" area that you're referring to. I was able to write the HSA pretax for the employee but still cannot figure out how to add the HSA pretax dollar amount into that employees HSA bank account. Again, I'm on QB online and not QB Desktop.

I'm having the same issue with Quickbooks online. I have $100 deducted from an employee paycheck and have no way to get that money into their HSA account. If I set up two bank accounts under direct deposit then it will deduct from the employee's net pay thus the employee is actually paying $200 but only receiving $100 into their HSA account. How can I set up QBO to direct deposit into an HSA without it coming out of the employee's net pay?

Hi there, @Hwill. Let's team up to help you get through this and have the contribution amounts flowing directly to the employee's HSA account inside QuickBooks Online (QBO).

Reading through your post, you'll want to review your company's current payroll set up and ensure all accounts are set accurately to make it easy to map the employee's taxes. This way, employee contributions go directly to his HSA account while keeping the employee's net pay on point. We'll gladly write down the steps to get you going:

1. Access your QuickBooks Online company.
2. On the top-right corner, click the Gear icon.
3. Select Payroll settings.
4. Scroll down to the Accounting section and then click the Pencil icon.
5. Review the set up.
6. Click the Done button once everything is in place.

If you wish to correct the mapping but are unsure what account to use to keep everything accurate, we recommend contacting your accountant. This way, they can provide more details to help you address this situation. If you don't have an accountant, I can help you find one. Feel free to visit this page to find an accountant for your business: Find a QuickBooks ProAdvisor.

In addition, here are some articles to help you manage employees, and keep track of your payroll activities:

• Edit or change employee info in payroll.
• Year-end checklist for QuickBooks Online Payroll.

The Community space is open 24/7 if you need help managing employee contributions or have any additional questions related to QuickBooks. As always, we'll do our best to respond as soon as possible to help address your concern. Keep safe.

Thank you for your response but that doesn't answer my question. The HSA deduction is set to go to our clearing account on the COA. Now I need to get that $100 deposited into the employee's HSA checking account. How do I get the cash to the HSA checking account via direct deposit through QBO? When I talk to the HSA merchant they say I need to go through the payroll company which is QBO. 

Thank you for getting back to us, @Hwill.

Let me share additional information about moving the $100 deposit from the clearing account to the HSA checking account in QuickBooks Online.

Currently, moving cash to HSA checking account via DD is unavailable. In QB, this is use for sending net pay to employee not for deductions and contributions.

I understand you already have a paycheck created. We can then move the $100. Follow the steps below:

1. Go to the Gear ⚙ icon.
2. Choose Payroll Settings.
3. Scroll down to the Accounting section, and then click the Pencil icon.
4. Locate and click the Pencil icon of the Payroll item assigned to the clearing account.
5. Change the account to the HSA checking account.
6. Hit Save.
7. Click the Pencil icon to update the transaction and set the date to the paycheck date.

The $100 should now be in the HSA account.

For future reference, you can read this article to guide you in pulling up payroll reports: Run payroll reports in QuickBooks Online Payroll.

Don't hesitate to click the Reply button below if you have questions about payroll deductions in QuickBooks Online. I'm always here to help. Have a great day.

Hello Ethel, 

Thanks for your attempt to respond but I think I'm not explaining what I need in a matter for people to understand. I know how to move money between accounts on our chart of accounts. What I really want to do is make the cash from our company bank account go into the HSA bank account of the employee (like an ACH or direct deposit). It would be nice if quickbooks had an option to enter the HSA banking routing and account number in order to move that HSA deduction from one bank to another. The problem I'm seeing is that it's not possible to do this pre-tax.