How do I pay a QSEHRA reimbursement through payroll?

Hello, tkatke. 

Thank you for reaching out to the Community. Let me share some information about setting up QSEHRA for your employees in QuickBooks Desktop. You can set up QSEHRA in payroll using the new tax-tracing type Qual. Small ER HRA. This allows you to trace and record the number of payments and reimbursements of your employee that make available annually under a QSEHRA plan.  

To set up the new Qual. Small ER HRA tax tracking type payroll item, here's how: 

1. Click the Employees menu and select Manage Payroll Items. Then, pick New Payroll Item.
2. Select Custom Setup and click Next.
3. Select Company Contribution and click Next. Then, enter a unique name for this new payroll item, which will appear on employee pay vouchers, pay stubs, and on payroll reports (for example, "Reportable Qual. Small ER HRA" ). Click Next.
4. Leave the agency information blank. This is a tracking and reporting item only, not a true liability item.
5. Press the arrow next to the Liability account box, and choose <Add New>.
6. In the Add New Account window, select Other Expense as the Account Type and enter a new Account Name (for example, "Reportable Qual. Small ER HRA"). Click Save & Close.
7. Click the drop-down next to the Expense account box and select the account you just created. Click Next. Note: If you are creating more than one payroll item for tracking QSEHRA payments, continue to use this account for both the liability and expense accounts. Setting both the liability and expense accounts the same creates a "wash" item that shows a zero amount on your Profit & Loss statements. This allows you to track QSEHRA payments for W-2 reporting purposes without these numbers affecting your financial reports.
8. Hit Yes to ignore the warning that you have set your liability account and expense account to the same account.
9. Click the arrow for the tax tracking type, and select the new tax-tracking type Qual. Small ER HRA. Click Next.
10. Tap Next twice, then Finish to accept the default settings on the Default rate and limit page.

For detailed steps and information, you can refer to this article: Desktop Payroll: Qualified Small Employer Health Reimbursement Arrangements (QSEHRA).  

Additional, you can read through this article about report that Qualified Small Employer Health Reimbursement Arrangements (QSEHRA): Report healthcare reimbursements (QSEHRA) on W-2 forms. 

Please let me know if you have additional questions about setting up QSEHRA in QuickBooks Desktop. I'll be here to lend a hand. Stay safe!

Thank you AileneA  for your reply. But the instructions you provided me are the exact instructions that I have already followed. I shared the link in my post. My question is in addition to that.

I've read your original post, Tkatke. I appreciate the clarification.

Let me add more information with regards to QSEHRA. The item is used for company contribution. With that being said, it will not add on the paycheck or money that your employee will receive.

If you wish to add an employee reimbursement, you'll have to create another payroll item. Here's how:

1. Click List.
2. Go to Payroll Item List.
3. Click the Payroll Item button, then select New.
4. Select Custom Setup, then click Next.
5. Select Addition, then click Next.
6. Choose an expense account to track the money for reimbursements.
7. Select the Tax Tracking type, then click Next.
8. Choose how to calculate the item, then click Next.
9. Enter a default rate, then click Finish or OK.

Then, add the item to the employee's record. Once done, when you create the paycheck, the item will be added automatically. 

As always, we suggest conferring with your accountant on the best way to handle this situation.

While we can't provide any accounting advice, we're right here to help you with QuickBooks technical concerns. Feel free to visit us anytime.

Thank you so much Kristine Mae ! This is very helpful.

I do have one other question, should I also be adding the Company Contribution item to each paycheck that contains a reimbursement? Or is that item really supposed to be used as way to track the amounts at the end of the year?

I'm glad to know that the information shared by my peer Kristine Mae above addressed your concern, @tkatke.

Yes, you can add the created payroll item for reimbursement to each paycheck as long as you need to reimburse your employees. For more guidance, you may want to check out this article: Create a non-taxable reimbursement payroll item.

You might also want to use this article that will serve as a guide to help prepare your tax forms: Year-end checklist for QuickBooks Desktop Payroll.

Please let me know if you need clarification about this, or there's anything else I can do for you. I'll be standing by for your response. Have a great day.

Hello Mark R.  

I have the same question and confess that I do not fully understand the last answer (sorry). 

The article indicates two different QSEHRA-related payroll items: one is a non-taxable addition, the other is a company contribution. 

The non-taxable addition is clear: when creating the paycheck, under Other Payroll Items, I certainly want to enter the QSEHRA reimbursement as a non-taxable addition, so that the funds can be transferred to my employee.

What to do with the company contribution - and in fact the very meaning of "company contribution" - is unclear. It does not affect the $ sent to the employee's bank account.  What am I supposed to do with it when creating a pay check? Ignore it? Add it for some tax reporting reason?

Please let me know if I can ignore it or not. 

With thanks, 

Marco 

Thank you for joining the thread, Marco.

Firstly, I appreciate the detailed information you've shared. 

Regarding the company contribution of QSEHRA, you can remove it from the Other Payroll Items if you want not to include it on your employee's paycheck. Or either ignore it as it won't add on the money that your employee will receive. However, I still encourage seeking help from your accountant or tax advisor to learn how to handle this matter.

I'm adding this article to know more about setting up QSEHRA in payroll: Desktop Payroll: Qualified Small Employer Health Reimbursement Arrangements (QSEHRA).

Please know you can continue to reach me here with any additional questions. Thanks for coming to the Community, wishing you continued success.

Greetings!

I was wondering about some help on this, too. I use quickbooks online, which doesn't have "payroll items" or "employees". My menu starts with "Payroll". Could you go through the steps for doing this with QB online?

Thank you :)

Hello there,  JThouron. 

Welcome to the QuickBooks family! Thanks for reaching out for support here in the Community. I'd be glad to show you how to reimburse an employee in QuickBooks Online. This can be done in just a few steps.

QuickBooks Online Payroll and QuickBooks Online Payroll Full Service

1. Select Workers from the left menu, then select Employees.
2. Select the employee's name.
3. Select edit (pencil) icon beside Pay.
4. Under How much do you pay, select Add additional pay types.
5. Select Even more ways to pay... drop-down, then select Reimbursement.
   • You may enter a recurring amount in the box, or add it when you run payroll.
   • You can also rename this pay type by selecting the pencil icon beside Reimbursement.
   • If you want to set up multiple reimbursement pay types, just select Add Reimbursement type, then enter a reimbursement name and amount.
6. Select Done.

Once reimbursement is added, you can also assign this to another employee.  After assigning the reimbursement to the employee, check your accounting preference to ensure it is posted in the correct accounts for exporting purposes.

You can check out this article for more details: Create a reimbursement pay type in Online Payroll. 

For additional reference about the payroll settings, you can also check the articles below:

• Payroll accounting preferences

• Set up Payroll account preferences

 Let me know if you have any other questions about reimbursement. I'll be happy to help you out.

I have the reimbursement setup and deducting from payroll.  How do I get the QSEHRA amount to show up in Box 12 with code FF?  With full service QBO Payroll, I can't find a way to add this information to the W-2 and support say's they cannot add it either.  I cannot be the only person with this problem.

Thanks for joining this thread, JPC Ventures.

Once you've determined that you need to include Qualified Small Employer Health Reimbursement Arrangements (QSEHRA) on your W-2s, you'll need to get in touch with our Customer Care team to have the appropriate health insurance reported on them.

Here's how:

1. Use your Help (?) icon.
   
2. Choose Contact Us.
   
3. Enter a description of the situation in the What can we help you with? field, then click Let's talk.
   
4. Select Start messaging or Get a call.
   

I understand you've reached out to Full Service Payroll support before and were advised they can't add it, but according to our Report employer health insurance on W-2s article, they're able to assist with assuring it's reported on W-2 forms. Be sure to review their support hours so you'll know when agents are available.

Please don't hesitate to send a reply if there's any questions. Have a great day!

I just called support as well and they had no idea how to direct this reimbursement to box 12 line FF on the W2.  Any additional information would be helpful.  Thanks. 

Joining the conversation to share details about QSEHRA reimbursements, rpdoug17.

Company contributions, as long as assigned to the correct tax tracking type, are still reported in the employee's W2 in QuickBooks.

You can follow the steps in this article on how to set up QSEHRA. Then, make sure to use the Health Coverage Cost in the Tax Tracking Type window.

Once the item is added on the paycheck or through a liability adjustment, it will automatically populate in Box 12 of the W2 form. Once done, all you need to do is to click on the drop-down list for the code and select the code FF.

Additional references when preparing tax forms are also provided here in case you might need them:

• Year-end Checklist for QuickBooks Desktop Payroll
• Get Answers to Your W-2 Questions 

Don't hesitate jump right back and ask more questions if you need anything else. We're always ready to help if you need one. 

I have tried both options detailed in the thread for How to Pay at QSEHRA reimbursement through payroll.  Of course, the first option doesn't add the funds to the employees check for reimbursement, but the Tax Tracking item for Qual.Small ER HRA is available to choose.  If I follow the second option, when it's time to pick the Tax Tracking item, the Qual.Small ER HRA is NOT available to choose.  Which Tax Tracking Item would I choose, so that it correctly shows up on the W-2?

Thank you,

Laura4648

I need this as well.  My accountant is telling me that there is no way to get QSEHRA reimbursements to show up correctly on W2's.

Hello,

How do we set this up on online payroll?

Calling help center and they can assist on setting up the contribution, but it won't reflect on the W2 properly.

Thanks for joining the thread to get some answers about QSEHRA setup, @Global Novelties LLC.

I see that you've already called our phone support with setting up the contribution. Glad you found us here and seek the details for setting up and reflecting your Qualified Small Employer Health Reimbursement Arrangements (QSEHRA) in the online payroll on W-2. Since you're using the online version of the software, the steps are different.

You can set this up under the How much do you pay section when editing the employee's pay. When you scroll down on the Pay types window, you'll see the Common pay types section where you can set up or add QSEHRA as a reimbursement.

Here's how you can do it in QBO:

1. Go to the Payroll menu and select Employees.
2. Click on the employee's name.
3. Use the Edit employee button below the employee name.
4. Under section 4, click the pencil icon below How much do you pay.
   
5. Select + Another Reimbursement type.
6. Enter QSEHRA and the recurring amount, then tick this box.
   
7. Once done, press Save.

I'll be adding some links about creating a reimbursement item and how to report the amount to the W-2 forms. Feel free to check them below:

• Create a reimbursement pay type in Online Payroll
• Report healthcare reimbursements (QSEHRA) on W-2 forms

I'll stay and answer your queries here if you need further assistance with contributions and payroll setup. I'll be more than happy to help you with your QSEHRA tracking. Have a great day!

Once I set this up, how do I record the check for reimbursement?  

Hi there, JBORNC.

Thank you for visiting the QuickBooks Community. I'll be sharing steps to ensure you can record the check for reimbursement based on the QuickBooks version you're using.

Once you have already set up the steps above or created a reimbursement in QuickBooks, you can now update your accounting preferences to make sure the reimbursement amounts post to the correct account in your chart of accounts.

For QuickBooks Online, you can open this article to see steps on how you can set up the payroll accounting preferences for the reimbursement pay type: Change your accounting preferences in QuickBooks Online Payroll.

Then, if you're using the QuickBooks Desktop Payroll version, you're asked to choose an expense account while setting up the payroll item. If you want to make sure or change your account, please follow the steps below.

1. Go to the Employees menu at the top and select Manage Payroll Items. Then, choose View/Edit Payroll Item List.
2. Open the payroll item you’d like to review.
3. Click Next until you get to the Expense account.
4. Review or make changes and select Next until you can select Finish.

After that, you’re now ready to reimburse your employee by creating a paycheck. Then, enter an amount in the Reimbursement field to record the check for reimbursement. 

Here's how for QBO:

1. Go to the Payroll menu on the left panel and select Employees.
2. Choose Run Payroll. Then, you can select your desired payroll schedule and click Continue.
3. Select or review the QuickBooks Bank account to track your payroll, the Pay period and Pay date.
4. Select the employees you'd like to pay.
5. Enter hours, compensation, memos, or any other necessary paycheck info.
6. Select Preview payroll.
7. Select Preview payroll details or Submit payroll.
8. Select Finish payroll.

You can click this article to see further details and how to perform the process if you're using QBDT: Reimburse your employee.

Lastly, you may refer to each article below on how you can run several payroll reports in QBO so you can use them to view useful information about your business and employees. Then, to a quick view of your payroll totals, including employee taxes and contributions in QBDT.

• Run payroll reports in QuickBooks Online Payroll.
• Create a payroll summary report in QuickBooks.

Don't hesitate to post again or click the Reply button below if you have other concerns with reimbursement. I'm always here to help, JBORNC. Have a great day!

After using those setup instructions, how do I may the payment? When I used those instructions, it didn't add to paycheck and/or it took out taxes 

Welcome back to the Community, JBORNC.

The pay type you're working with is non-taxable. This means no taxes will be taken out of your reimbursement.

In regard to it not adding to its associated paycheck, I'd recommend getting in touch with our Customer Care team. They'll be able to pull up the account in a secure environment, conduct further research, and help identify if anything is missing.

They can be reached while using QuickBooks.

Here's how:

1. In your top menu bar, go to Help, then QuickBooks Desktop Help.
2. Click Contact Us.
   
3. Enter a brief description of the issue in our Ask a question (or tell us what's wrong) field, then hit Continue.
   
4. Select We’ll contact you for a callback or Message Us to start an instant messaging session.

Be sure to review their support hours so you'll know when agents are available.

Please don't hesitate to send a reply if there's any additional questions. Have a lovely day!

I have a question:  

Do you report the amount of tax free QSEHRA reimbursement on your total on the 941?

We pay tax semi-monthly; would the tax free total reimbursement show as income?

None of these links are live anymore. This is not helping us get any closer to a resolution. Poor job QB service team.

This method does not provide the correct information in the W2, as already described by multiple users.