How To Set up Health Savings Account (HSA) Plans In QuickBooks

Do you want to set up your contribution to health savings account (HSA) plans in QuickBooks? Don’t worry you need to follow easy and simple steps to contribute to HSA. This article will tell you how you can set up your own health savings account (HSA). But before doing anything you should have proper knowledge of it. So, here are some points that make you more friendly with the HSA plans. You can dial the toll-free number +1-844-405-0904, for further QuickBooks Online Payroll service.

What is a Health Savings Account (HSA)?

A health savings account means sometimes urgently we need money for our medical expenses. So in this case, if you don’t want that your bank account will be empty.  So there is a solution you can especially open a savings account that is absolutely tax-free. Use that account to save some money for health savings.

Some Advantages of a Health Savings Account?

Some advantages of a health savings account are:

  1. The money you put in this account will be tax-free.
  2. The amount of interest you will get will be tax-free.
  3. Let’s say you don’t take your money for use. So it will be safe for another year also It will not decrease.
  4. This HSA amount will be beneficial at the time of requirement. When you reach the age of 64 you can use this money for anything there is no penalty for you.
  5. And it is the type of investment that will help you in the future with medical expenses or others.

Determine contribution

It is the responsibility of employers to determine the eligibility of an employee And HSA contribution for an annual maximum. Automatically giving a Limit to the annual maximum is not in the hands of intuiting. Because these are very widely planned. Employers and employees can also make a contribution to the HSA account. 

Step to set up Health Savings Account (HSA) Plans In QuickBooks

Basically, HSA is a savings account, or health savings account, that your employee can utilize to pay for their own out-of-pocket medical expenses. Health plans that qualify for an HSA are less expensive, and funds in an HSA never expire. To set up an HSA contribution in QuickBooks you have to follow the given steps:

Step 1. Understand HSA Qualifications

You have to determine some of the following points before setting up an HSA plan:

Is your employee eligible?

Before employees contribute to an HSA, they should meet some criteria because every plan provider has different plans and requirements. Also, review IRS Publications 969 to get the details.

Are the HSA contributions pre-tax or after-tax?

Employees can contribute in two ways that are Pre-tax and After-tax.

Pre-tax: In case, if an HSA is contributed through a cafeteria plan (Section 125 plan), the contribution is done before taxes. Then the HSA amount will be entered with a “W” code in Box 12 of Form W-2. 

After-tax: After-tax refers to the situation where contributions are taken out of an employee’s payroll after the calculation of taxes.

How much can you both (employees and employer) provide the HSA (Health Saving Account)?

An annual limit on contributions to the HSA is set by the IRS. There are numerous factors that determine how much you and your employees can contribute. For more details, see IRS Publication 969 and also contact your plan provider.

Step 2: Set up HSA Contribution

Contribution limits for 2022 and 2023 are given below:

Employer and Employees HSA contribution limitSelf-only: $3,650Family: $7,300Self-only: $3,850Family: $7,750
HSA catch-up contributions (age 55 or older)$1,000$1,000

HSA contributions also depend on the payroll product so set up HSA contributions accordingly:

Setting up an Employee HSA contribution

QuickBooks Online Payroll

For QuickBooks Online Payroll you have to follow the given steps:

  • Firstly you have to open Payroll.
  • Then click on Employees and choose the employee for contribution.
  • Now go to Deductions and Contributions.
  • Next, select Start or Edit.
  • Choose + Add deduction/contribution.
  • Now from the dropdown menu, you have to select:
    • HSA plans from the Deductions/Contribution type
    • Pretax HSA from Type
  • Now you have to enter a description.
  • Then next you have to enter the amount or percentage whatever you want to calculate your contribution.
  • After doing the above steps you need to Add an annual maximum amount.
  • Now final step you have to select Save and Done.

QuickBooks Desktop Payroll:

Pre-tax and After-tax are the two types of tax tracking that can be used to set up HSA employee contributions. Follow the steps while using QuickBooks Desktop Payroll:

  • Firstly go to the Lists.
  • Next open Payroll Item List.
  • Click on New after Choosing Payroll Item.
  • In the next step, you have to choose Custom Setup and then click on Next.
  • After that click on Deduction and then again click on Next.
  • Now you have to put the item name and then click on Next.
  • Next, you have to Choose the account number and the name of the agency to whom the liability is paid. Next, click on it.
  • Now the next step is to set the Tax tracking type mentioned above.
  • Choose HSA Emp. (Taxable) or HSA Emp. (Pre-tax) and then click on Next.
  • Now you are in the Taxes window, click Next.
  • After choosing Neither in the Calculate based on quantity window, click on Next.
  • Choose Net pay (only applicable to HSA Emp. (Taxable) tax tracking) in the Gross vs. Net window.
  • Then click on Next.
  • Leave Default Rate and limit fields blanks. When the item is added to the employee profile, you have the option to add the rate and limit.
  • Finally, click on Finish.

Direct deposit into HSA account (Optional)

  • Again you have to go to the Lists.
  • Next, click on the payroll item List.
  • Then choose Payroll item and click on New.
  • After that choose Custom Setup and then click on Next.
  • Then the next step is to choose Addition and click on Next.
  • Now you have to choose the same account in the Expense account that is used when creating an HSA item.
  • Then again click on Next.
  • Choose None to tax tracking type and then click on Next.
  • Now choose Net pay in the Gross vs. Net window and click on Next after that click on Finish.
  • After doing all the above steps, you have to double-click the employee affected from the Employee Center. Then next choose payroll info and Direct Deposit.
  • After that Choose Use Direct Deposit and Split Payment. For this, you have to fill:
    • Deposit Portion of Payment: You have to enter the HSA bank routing information and the amount to be deposited.
    • Deposit the Remainder: Here you have to enter the information of employees’ direct deposit.
  • Now to save the changes you have to click on OK twice.
  • Now keep remembering that given things are on the paycheck when you pay the employee next time.
    • The employee’s HSA deduction item
    • The HSA amount (the same amount as the HSA deduction item) should be entered in the Rate field for the Addition item.
    • There should be two Deposits to transactions displayed in the Employee Summary.  The amount to the HSA account and the HSA deduction should match up.

For Intuit Full Service Online Payroll

In this, you can only choose from the pre-existing deductions. But if you want to set up a new Deduction you can easily contact the Support team of payroll. If you want to contact them go to their help section In the payroll account.

  1. First, you need to choose the employee’s name from the employees.
  2. Click on the edit option from the deduction in the contribution section
  3. Choose to add a description.
  4. From the deduction (it is a drop-down), click on taxable HSA/pretax.
  5. In the Amount per period, type the amount, So from the pay of the employee, it will be deducted by the choice of the maximum amount of annual.
  6. Click on save.

Intuit Online Payroll

  1. First, you need to choose the employee’s name from the employees.
  2. Click on the edit option from the deduction in the contribution section.
  3. Go to the add a deduction From the deduction in benefits.
  4. Then click on a new direction.
  5. Then you will see our dropdown as a “category”, Under that choose HSA plans.
  6. Then there is another dropdown as a “type”, under that choose pre-tax HSA or taxable HSA.
  7. Then write a description and add an amount per period.
  8. Then choose to save and click on Ok. 

Setting up the Employer HSA contribution

For QuickBooks Online Payroll

  1. First, from the payroll menu, you need to choose employees
  2. Now click on the employee’s name
  3. Then click on the edit option which is behind the payment option.
  4. Now you will see the edit option in Section 3 click on it.
  5. A section is available as “more ways to pay”. Expand it.
  6. Click on the HSA contribution of the company.
  7. Click on done.

Intuit Full Service Online Payroll

  1. First, you need to choose the employee’s name from the employees.
  2. Now you will see an option as “pay”. From that click on the edit button.
  3. Now you will see an option as “additional pay”. There is an option to show all pay types click on it.
  4. Click on the HSA contribution of the company. But sometimes the contribution by the company will be equal in every pay period, Then type the amount in the dollar in the field of the recurring amount.
  5. Click on save

For Intuit Online Payroll

  1. First, you need to choose the employee’s name from the employees.
  2. Now you will see an option as “pay”. From that click on the edit button.
  3. There is a section on what additional ways do you pay the employee, you need to choose to show all pay types.
  4. Choose the company’s contribution. After this type the amount 
  5. Click on ok.

HSA contributions & W2 forms

  • If the HSA has been contributed by the company and the employee deductible is by an employee, on the w-2 form, box-12 will show the sum of both accounts.
  • In the box-12, your contribution is recorded on the W2 form. And most in the state wages and removed in the federal wages. The annual HSA contribution of the company is reported in box-12 with the W code and w2 of the employee.
  • In the case at the level of state or local, your contribution is having taxes. They add the amount to the wages of local and taxable states.
  • Remember the contribution by the HSA of the company the amount of it will not add to the net pay of the employee. This responsibility is of the employers that contribution will be deposited by the provider of HSA.

Is Intuit debit payments to the plan providers?

The funds that are withdrawn can not be sent to the employee by the Intuit payroll or the contribution of the company will not be provided to the plan providers. This is the responsibility of the employer

Eligibility for qualifying the health savings account (HSA)

  1. For opening an HSA account it is required to cover a high deductible health plan (HDHP). 

In the year 2022, the highest deductible plan is the IRS. Another plan deductions are $1400 for a single person and for a family are $2800

  1. You should not have any health coverage but there is one exception that is permitted through the IRS is accepted.
  2. You should not be registered with Medicare.

Hope, this article will help you, but still, if you want any help then feel free to contact our technical support team by dialing our toll-free +1-844-405-0904 and get instant help from our certified ProAdvisor.

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