Question

How to record FSA Health & Dependent Care

Forum|Forum|4 years ago
March 28, 2022
2 replies
0 views

How do I set up accounts in QB's to track the FSA (Heath & DependentCare), to track what we withhold from the employees and what reimbursements the employees receive. The withholdings are deducted from Payroll, but the expenses need to be recorded to offset. What's the best way to keep track of this.

QuickBooks Desktop

Rubielyn_J

I'm here to help record FSA Health & Dependent Care, @LM1307.

To set up a Flexible Spending Account in QuickBooks, we need to create an FSA deduction item. To proceed, here's what you need to do:

Go to the Lists menu and then choose Payroll Item List.
Select the Payroll Item button and click New.
Choose Custom Setup and select Next.
Click Deduction and select Next.
Enter the item name and select Next.
Choose 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.
In Taxes, do not make any changes and choose Next.
In Calculate based on Quantity, leave the default set to Neither, select Next.
Enter a Default Rate.
Enter a Limit, and choose Finish.

In addition to that, I've also attached some relevant articles on managing your payroll transactions in QuickBooks:

Keep me posted if you have other questions about handling your FSA Health & Dependent Care in QuickBooks. I'll be around to help you. Stay safe and take care!

F

FemiAk

Hello I have a similar question, maybe slightly different. My client uses QBO, its a church in CA, and pays dependent care expenses on behalf of its employees. Currently we are just tracking it as employee benefits. But, How do we set up this dependent care FSA in QBO so that we are tracking those expenses per employee and we are doing what's necessary to include it in the W2 box 10, etc. Any help will be greatly appreciated. Thank you

M

MirriamM

Hello there, @FemiAk. Let me share information on setting up dependent care FSA.

In QuickBooks Online (QBO), the supported FSA types are the Dependent care FSA, Medical expense FSA, and Limited-purpose FSA. To set this up in your QBO payroll account, here's how:

In the left menu, select Payroll.
Go to the Employees tab.
Locate and select the employee's name.
Click Edit ✎ next to Pay.
In section 5, select + Add a new deduction or + Add deductions.
From the Deductions/contributions ▼ dropdown menu, choose New deduction/contribution.
Choose a Deduction type and Type from the small arrow ▼ icon.
Enter Provider name(appears on a paycheck).
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.
Select OK, then Done.

To learn more about managing deductions and contributions in QBO, see this article: Set up voluntary deductions in Online Payroll. And for more information about the taxability and how it reports on federal forms, see links under the Health Insurance section in this help article: Understand supported pay types and deductions in QuickBooks Online Payroll.

In addition, here's a resource for a guide in processing payroll: Creating Payroll in QuickBooks Online. It contains detailed information in setting up your account and how to get started with payroll.

Let me know if you have any questions about setting up your deductions and contributions. I'm always here to keep helping. Take care and have a great day.

Rubielyn_J

Hi, @LM1307.

Hope you’re doing great. I wanted to see how everything is going about recording FSA Health & Dependent Care concern you had the other day. Was it resolved? Do you need any additional help or clarification? If you do, just let me know. I’d be happy to help you at any time.

Looking forward to your reply. Have a pleasant day ahead!

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