How do you make an HSA employer contribution on QB online? And does the employer contribution need to be on the W-2?

The Community has you covered, @ksundman.

Check out the steps below to make an HSA Employer Contribution in QB Online:

Create An HSA Employer Contribution

1. From QuickBooks Online, navigate to the Workers tab and the Employees section.
2. Click the name of the employee, then click the tiny Pencil icon ✎ next to Pay.
3. Under How much do you pay this employee?, click Add additional pay types or the Pencil icon ✎ depending on what you see.
4. Click Even more ways to pay this employee to expand the pay type list and select Company HSA Contribution.
5. Enter a recurring amount to contribute each payday, or leave it blank to enter the amount manually each paycheck.
6. Click Done.

These instructions are also available from our guide on setting up company HSA contributions here. Doing this will enable you to add the employer's contribution to your employee's HSA plan for every pay period.

Regarding your question on how this item should affect the employee's W2, the guide states that your contributions to an employee's HSA are reported in Box 12 but excluded from federal wages and most state wages. You can learn about this and the taxability of all QBO-supported pay types, deductions, and contributions in our thorough article on the matter here. 

Please keep in touch with me here for all your QuickBooks needs. Thanks for coming to the Community, cheers to a successful and stress-free tax season for your business.

I am trying to properly enter a $3,450 HSA employer contribution for tax year 2018 and am getting stuck on the following per the instructions already posted. 

Note that I am using QuickBooks Online Simple Start, but imagine there's got to be a way to do this properly without having to upgrade as I haven't needed and don't need the additional features of the more expensive plans as I run a small S-Corp business where I'm both employer and employee.

In step 2. of the instructions where it says:

Click on the name of the employee, then click the tiny Pencil icon next to Pay, I simply don't get this option showing up anywhere in the pop up window for Employee Information (per screenshot I took of the available fields). 

Can someone please let me know why this is?

Also, is there a different approach to making a HSA employer contribution in QBO Simple Start other than the method already suggested here? By creating the proper account in Chart of Accounts and mapping it to the employer/employee somehow?

Thanks!

Thanks for your reply GarlynGay, 

I did just go through the steps to turn on Self-Service Payroll, but after all the many steps, I still don't get the pencil icon showing up anywhere that I can see next to "Pay" anywhere. See the screenshot.

I also already run payroll through Gusto and so this seems like a heck of a lot of steps to just enter an Employer HSA contribution when there's got to be an easier way.

I was thinking of adding the name of the HSA vendor to my Vendor list as they received the HSA contribution and then just need to know what sort of proper account to set up in my chart of accounts to get the transaction (which was a written check) at least out of my "for review" items and into my register so I can reconcile some bank statements.

Good to see how the self-service payroll feature is set up, but seems overkill for my purposes for now as I already use a payroll service.

Is it possible to make a one time payment using QuickBooks Payroll, and have it automatically be taken from the same bank account that processes standard payroll?  Or is this just for tracking purposes?  I believe the OP was asking about setting up the HSA account as a Vendor.  Is this possible?

Thanks in advance.

Good day, ccolon,

You're unable to send a direct deposit for the vendor's HSA payment. QuickBooks Online is used for tracking purposes.

You can use bill pay instead to send the HSA contributions electronically.

Here's an article for reference: Company contributions to a Health Savings Account (HSA)

I'll be right here if you have additional questions.

Can you clarify with how to send HSA payments via bill pay? I  know each HSA vendor is probably different. Am I able to enter the account and routing number for the employee or do I just put their name and let the bank figure it out?

Hello @cherykldf,

Let me clarify things up and guide you on how you can pay your employees' HSA contribution.

To start with, if you wish to use the Online Bill Payment feature for this matter, you'll have to acquire first a government bank account information. This because online bill pay's primary mode of payment is transferring the amount from one bank to the other.

However, the IRS still requires you to pay this contribution via any payroll system, such as QuickBooks Online Payroll since the payment made needs to be associated with your company EIN.

That being said, here's an article you can read to learn more about your employee's HSA contribution: Set up Health Savings Account (HSA) plans.

Additionally, I've also included this reference for a compilation of articles you can use for the upcoming year-end preparations: Learn how you can wrap up this year’s payroll and prepare for the next with QuickBooks Online Payrol....

If you have any other questions, please let me know in the comments below. I'll be here to lend a hand. Stay safe!

I don't understand what this has to do with the government, or what a government bank account even is. I have my employees' HSA account routing numbers and account numbers which are through their banks or other HSA providers online.

I am trying to send the employer contribution to my employees' HSA accounts. According to the article you linked:

"Does Intuit send payments to plan providers?

Intuit payroll services do not send employee withdrawn funds or company contributions to plan providers. This must be handled by the employer."

So I need to find a way to get the payment to the HSA company for each employee, because QB payroll does not do this (as stated above). I can write paper checks to each HSA provider, but was wondering about the alternative solution involving Bill Pay mentioned by the response above.

I am still inputting the company contribution amounts via QB payroll as integrated with my QBO account, but then I need to actually get that money into the accounts somehow.

That's right that we don't send funds to the HSA company, cherykldf.

The HSA plan deducted from the employee's paycheck is for recording purposes in QuickBooks Online (QBO).

To clarify things out, you need to deposit the deduction to the HSA company, not on the employee's HSA account.

There are two options you can take to do this. You can either set up the HSA company as a vendor in QBO. Then, pay them using Direct Deposit (DD). Or write a check and hand it to them.

To pay the agency using DD, you need their bank information. Once you have the details, here how to set it up in QBO:

1. Go to Payroll from the left menu, then Contractors.
2. For a new contractor, select Add a contractor or select the existing contractor to add or edit banking information.
3. Select Bank account.
4. As prompted, enter in the following banking info:
   • Account Number
   • Account Type
   • Routing Number
   • Accountholder Phone Number
   • Accountholder Full Name
5. Click Save.

I'm adding this link for more details: Enter and write checks in QuickBooks Online.

Feel free to leave a comment below if you need additional information. Just tag my name, and I'll get back to you.

Hello,

In the Chart of Accounts is the employer contribution to an HSA account considered a Payroll Expense?   Assuming that the employee contribution is a payroll liability.

We fund HSA accounts on a Quarterly basis for our employees should those funds be considered a payroll expense?

Hi @Kmtjs2001,

Yes, that's correct. An employer's HSA contribution is considered a business expense by the company. 

To set it up correctly, follow these steps:

1. Highlight the Payroll tab.
2. Select Employees.
3. From the list, click on the employee in question.
4. Click the Edit (pencil) icon beside Pay.
5. Press the Edit (pencil) icon in section 3.
6. Expand the section that says Even more ways to pay.
7. Pick Company HSA Contribution.
8. Hit Done.

Take a look at this article for more details: Set up Health Savings Account (HSA) plans. 

I also suggest you view this article: Set up voluntary deductions in Online Payroll. It has a table of voluntary deductions available in QBO, as well as the steps to set them up. 

Don't hesitate to tag me in the comments below if you have other questions about HSA contributions. I'll be more than willing to help you out. 

its not supposed to be taxed tho, how do you do it pretax?

Welcome to the thread, @ski town.

QuickBooks Online (QBO) only allows you to set up company HSA contributions. Since it's not taxable, I recommend contacting your tax agency. They can provide more information on handling this situation.

For more information about tracking HSA contributions, check out this article: Set up a Health Savings Account (HSA) item in QuickBooks Payroll.

If you want to set up voluntary deductions in the future, check out this article for the steps: Set up, change, or delete employee-paid payroll deductions.

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

Hello!

The Company HSA contribution is not federally taxable but it is California state taxable. How do I set that up in QB Online payroll please?

Welcome to the Community, SantaCruz617! The link my colleague, MirriamM shared above will assist with that. If you need additional assistance, don't hesitate to let me know. 

Hello,

I read that article prior to posting my question. It only addresses federal taxes (referencing the W4) and not individual state taxes. My understanding is that company contributions to HSA accounts are not federally taxable. However, company contributions to HSA accounts are taxed as wages in California. How do I set this up to be compliant with California?

Thanks!

Thanks for the quick response, SantaCruz. I'll share additional information about setting up a Health Savings Account (HSA) in QuickBooks Online.

You'll want to exempt the Federal withholding within your employees' profile.

Here's how:

1. Go to Payroll, then Employees.
2. Select your employee. From Tax withholding, select Edit.
3. In the Federal Withholding Filing Status ▼ dropdown, select Exempt.
4. Under the Tax exemptions section, tick Social Security and Medicare.
5. Once done, select Save.

Furthermore, you can simply follow this article to set up an employer HSA contribution: Set up a Health Savings Account (HSA) item in QuickBooks Payroll.

Nevertheless, I would recommend reaching out to your tax consultant for further guidance about this process.

Please let me know in the comments below if you have any other questions. I'll be here to lend a hand. Stay safe!