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AGCorp
Jan 27, 2021 1:32 AM UTC
Solved

Setting up ICHRA in Quickbooks Desktop with Payroll

Hi all,

 

How do I go about setting up an ICHRA reimbursement account to allow tax free reimbursement for medical expenses for employees? Is this setup different than QSEHRA?

 

Thanks

AG

    IamjuViel
    IamjuVielAnswer
    Jan 29, 2021 12:10 AM UTC

    Hi,

    Thanks for your response. I have been told to track this as a non taxable reimbursement.

    Given this, what tax tracking type should I use?

     

    Thanks again,

    AG


    Hello there, @AGCorp.

     

    You can choose None as its tax tracking type. I've added a screenshot for your reference.

     

     

    Also, if your reimbursement involves an expense that is unit-based, you may set the account up to calculate the reimbursement by multiplying a rate you supply by the number of units you enter. To do this, check the "Based on Quantity" box and click "Next." 

     

    You can read through this article to learn more about tracking non-taxable reimbursements and payroll items: 

     

    Ge back back to us here if you have other questions or concerns about managing your payroll information. I'm always here to help.

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    10 replies

    MarsStephanieL
    MarsStephanieL
    Jan 27, 2021 3:25 AM UTC

    Hi there, @AGCorp.

     

    Allow me to show you some of the steps you need to do before tracking the Individual Coverage Health Reimbursement Arrangement (ICHRA).

     

    Setting up the ICHRA and Qualified Small Employer Health Reimbursement Arrangements (QSEHRA) is the same about creating pay types. However, when tracking the tax type, you'll need to contact your agency and pick the correct tax tracking type.

     

    Here's how to create a pay type:

     

    1. Go to the Employees menu and select Payroll Center.
    2. Click on the Payroll Item button at the bottom-left part of the Payroll Center window.
    3. Choose what setup method is applicable if it's either EZ Setup or Custom Setup.
    4. Follow the on-screen details until it's done. Here's a glimpse of the process:

     

     

    I've added this article to know more details about the QSHRA: Desktop Payroll: Qualified Small Employer Health Reimbursement Arrangements (QSEHRA).

     

    If you have any other questions or concerns, feel free to post here anytime. Have a good one.

    AGCorpAuthor
    Jan 27, 2021 10:27 AM UTC

    Hi,

     

    Thanks for your response. The followup question I have is with regards to your comment about the tax tracking type. Quickbooks already has a QSEHRA tax tracking type. But I don't see one for ICHRA.

     

    I am not an ALE (i.e. I have less than 50 employees), so I don't have any 1095 reporting obligations for the ICHRA offering. Given this, what should my tax tracking type be?

     

    Thanks in advance,

    AG

    JamesDuanT
    Jan 27, 2021 12:37 PM UTC

    Thanks for getting back to us and clarifying the scenario, AGCorp.

     

    QSEHRA and ICHRA are non-taxable payments. With that said, the steps provided in the article to create the QSEHRA payroll item should be the same when you create it for ICHRA: Desktop Payroll - Qualified Small Employer Health Reimbursement Arrangements (QSEHRA).

     

    Though that is how we set up the payroll item in QuickBooks Desktop, we still recommend contacting your state agency or accountant. They can tell you what is the correct tax tracking type for ICHRA item that will suit your business setup.

     

    Note that setting up the payroll items correctly is the best thing we can do in QuickBooks Desktop. This is to ensure that the calculations related to the payroll data are accurate.

     

    Keep us posted if you have additional queries in setting up the payroll items. We'll be right here to further assist you.

    Sandy Illumen
    Mar 22, 2023 9:03 PM UTC

    Can the ICHRA compatible with QuickBooks online with Payroll?

    Kurt_M
    Mar 22, 2023 10:25 PM UTC

    Hello there, @sandy11_2.

     

    Yes. ICHRA is compatible with QuickBooks Online (QBO). It's easier to set it up inside the program, and the process is as simple as how it sounds. I do believe you can accomplish your goal in no time. To get you going, these are the steps:

     

    1. Access your QuickBooks Online company.
    2. Go to the Workers tab, and then choose Employees.
    3. Select the employee's name, and then click the Pencil icon beside Pay.
    4. Under How much do you pay drop-down, click Reimbursement. Know that you may enter a recurring amount in the box or add it when you run payroll. Also, you can rename this pay type to "ICHRA Reimbursement" by selecting the pencil icon beside Reimbursement.
    5. Once you're ready, click Done.

     

    Moving on, when you create a paycheck for the employee, you'll see the Reimbursement Item in the Pay column. You'll want to enter the reimbursement amount to add it to the employee's paycheck. If you'd like, you can even change the amounts each month if the reimbursement isn't a fixed amount each month.

     

    Also, once the reimbursement is added, you can assign this to another employee. After attaching the reimbursement item to all your employees, you'll want to check your accounting preference to ensure it's in the appropriate accounts. Do this if you're planning on exporting it in the future. For further details, visit this article: Reimburse your employee in QuickBooks Payroll.

     

    In addition, I've got you this handy article to help you in modifying reports to highlight more details inside QBO: Customize reports in QuickBooks Online.

     

    @sandy11_2, thanks for dropping by here today. I'll be more than happy to guide you further if you need assistance with this. Stay safe, and have a nice day!

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