Learn how to set up a Flexible Spending Account in QuickBooks.
To create an FSA deduction item:
- Select Lists then Payroll Item List.
- Select on the Payroll Item button and select New.
- Select Custom Setup and select Next.
- Select Deduction and Select Next.
- Enter the item name and select Next.
- Select the Liability Account and Expense Account then Next.
- Set the Tax Tracking Type to either Dependent Care FSA or Med Care Flex Spend and select Next.
Note: Dependent Care FSA - used for employee contributions to dependent care benefits under a Section 125 plan. Med Care Flex Spend - used for employee contributions for medical expenses associated with a Flexible Spending Account benefit offered in a Section 125 plan.
- In Taxes, do not make any changes and select Next.
Note: For California employees, Select to clear CA - Withholding, CA - Unemployment Company, CA - Disability Employee, and CA - Employment Training Tax, as the state of California doesn't consider FSAs to be pre-tax.
- In Calculate based on Quantity, leave the default set to Neither, select Next.
- Enter a Default Rate (if all employees will have the same deduction; otherwise, leave this field blank, and enter the rate on the employee profile).
- Enter a Limit, and select Finish.
For more information see: Benefit Plan Contribution Limits for 2019.