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How do I set up a 125 Cafeteria (PreTax) health insurance deduction and company contribution in QuickBooks Online?

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QuickBooks Online

I meant to say, did you mean section 5?

I figured it out.

From section 5 in pay section of each employee, select "add new deduction", under deduction/contribution select "new contribution/deduction" again! Then under c/d type: select health insurance, type: medical insurance, enter provider or whatever you want it to say on pay stubs, select amount for employee, employer then select taxable or pre-tax and OK!

KlentB

Let me help you in setting up the Section 125 cafeteria benefit plans, Sibyl.

With this plan, your employees can pay medical, dental, and vision insurance premiums with pretax paycheck deductions. You follow the steps below in setting this up:

Select Workers from the drop-down menu.
Click the Employees tab.
Choose an employee from the list.
Click the Edit ✎ icon (next to Pay).
In section 5, select + Add a new deduction.
Select Health Insurance from the Deductions/contributions ▼ drop-down menu and Medical Insurance for the Type.
Choose $ amount or % of gross pay and enter the $ amount or percentage from the Amount per pay period ▼drop-down.
Do the same for the Company-paid contribution if applicable.
Click OK, then hit Done.

I encourage you to visit this link to learn more about how this health insurance plan work in QuickBooks: Section 125 cafeteria plans.

Here's an article that will help in confirming an employee's wages and benefits for year-end reporting: Year-end Reports Employee wages and benefits reports.

Fill me in if you have any other concerns or further questions about deductions and contributions. The Community will always have your back.

S

SibylAuthor

Please share how to properly set up the "Existing Deduction" that I am to select from the contribution/deduction drop down list. FYI I do not want the information to be printed incorrectly on the W-2s. This is for a pre-tax health and medical insurance plan and NOT an HSA.

C

Catherine_B

Let me walk you through in settings up your Pre-tax Health Insurance, Sibyl.

Here's how:

Go to the employee's profile.
Select on the employee and go to section 5, click + Add deduction link.
Select these options from the drop-down:
- Deduction/contribution or garnishment: Deduction/contribution
- Deduction/contribution type: Health Insurance
- Type: Medical Insurance
Enter the provider and the amounts for Employee and Company-paid fields.
Select Pre-tax insurance premium.
Click OK.

Once you've run payroll the insurance is deducted from the employee's gross pay before Medicare, Federal, and State taxes are calculated.

I'll be here if you need more help.

P

patley

I have done all of this and it is NOT reducing the taxable portion of the premium or FSA and it is not showing up on the W-2 either

How do we set it up to reduce the taxable portion of the income and have it actually work?

M

Maybelle_S

Hello there, @patley.

As an insight, the supported FSA types in QuickBooks Online (QBO) are the Dependent care FSA, Medical expense FSA, and Limited-purpose FSA.

To learn more about the taxability and how they're reported on federal forms, see links under the Health Insurance section in this help article: Supported pay types and deductions explained.

Here's how to set this up in your payroll account:

1. Go to the Workers menu, and then Employees.

2. Select the employee's name.

3. Click Edit next to Pay.

4. In section 5, select + Add a new deduction or + Add deductions.

5. From the Deductions/contributions drop-down arrow, choose New deduction/contribution.

6. Choose a Deduction type and Type from the small arrow icon.

7. Enter Provider name(appears on a paycheck).

8. From the Amount per pay period icon, choose $ amount or % of gross pay and enter the $ amount or percentage. Do the same for the Company-paid contribution as applicable.

9. Select OK, then Done.

To properly track those items, it's best to consult an accountant for assistance.

For future reference, here's an article to help you learn about filing state and federal taxes in QBO: Pay and file payroll taxes and forms.

If I can be of any additional assistance regarding contributions/deductions concerns, do let me know. I'm always here to keep helping.

M

MikeHcpa

Does quickbooks offer a prototype sec. 125 plan for employers to use?

Are the options selecteed by checking various boxes.

JoesemM

Hi there, @MikeHcpa. I'm here to share insights about prototype sec. 125 plan.

Currently, QuickBooks doesn't offer a prototype sec. 125 plan for employers to use. I can see how this feature would be helpful for you and your business.

Since this isn't an option, I encourage you to submit a feedback to our Product Development Team for review when determining features to be added in updates. This can be done directly through your account by clicking the Gear icon in the top right corner, then select Feedback or by going to the following link: QuickBooks Online Feature Requests.

Also, you may visit these links to learn more about how insurance plan work and prepare your account for year end:

Know that you can always swing by if you need help with anything else. We're just a comment away. Stay safe!

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