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Set up Health Savings Accounts in QuickBooks

A Health Savings Account is a special kind of medical expense savings account, created by the federal Medicare Prescription Drug, Improvement, and Modernization Act of 2003. An HSA allows an individual who is covered by a high-deductible health insurance plan to put aside money for medical expenses.

Contributions made to an employee's HSA by an employer do not count as part of the employee's gross income. Instead, they are treated as employer-provided coverage for medical expenses. As such, these contributions are not subject to withholding from wages for income tax, and they are not subject to FICA, FUTA, Medicare or Railroad Retirement tax.

For more information about HSAs, consult your tax advisor or benefits professional.

Detailed Instructions

 

 

 

 

 

If this solution does not resolve the issue, you can read discussions and post messages and questions relating to your issue on the Intuit QuickBooks Community site for free, or you can contact a technical support agent for additional guidance. Fees may apply.

 

Tracking HSA contributions made by the employer

You can set up a payroll item in QuickBooks to track employer contributions to an employee's HSA and report them on the employee's W-2.

To set up an HSA payroll item:

  1. In Quickbooks, click on Employees on the top menu bar, and select Payroll Item List.
  2. Click on Payroll Item in the lower left corner, and select New.
  3. Select Custom Setup, and then click Next.
  4. Select Company Contribution, and then click Next.
  5. Follow the on-screen instructions. On the Tax Tracking Type screen of the payroll item wizard, choose either HSA Co. (Taxable) or HSA Co. (Nontaxable).
  6. On Gross vs Net, choose gross unless specified by the company providing the health savings.

Employer-contributed HSA information on the W-2:

Amounts collected via the Health Savings Acct payroll item appear in Box 12 of the employee's W-2. QuickBooks also enters Code W in Box 12, to indicate that the amount represents employer's HSA contributions.

Tracking HSA contributions made by the employee

You can set up a payroll item in QuickBooks to track employee contributions to their HSA.

To set up an HSA payroll item:


 

  1. Select Custom Setup, and click Next.
  2. Click Deduction, and click Next.
  3. Follow the onscreen instructions.
  4. On the Tax Tracking Type screen of the payroll item wizard, choose either HSA Emp. (Taxable) or HSA Emp. (Pretax).
  5. On the Calculate based on quantity screen, select Neither.
  6. On Gross vs Net, choose gross unless specified by the company providing the health savings.

Employee-contributed HSA information on the W-2

Employee HSA contributions do appear on the W-2 only if the tax tracking seleted is for HSA Emp. (Pretax).

The amount will appear in box 12 with code W.

Finding out how much an employee has contributed to their HSA

To find out how much money an employee has contributed to their HSA, run a Payroll Item Detail report and filter the report so that it only shows transactions for the payroll item you set up to track employees' HSA contributions.

KB ID# HOW12236
9/16/2014 8:28:58 PM
PPRDQSSWS402 9102 Pro 2013 0d2e12