Sage 2018 Payroll Compensation Tax Rule for HSA in California?

We are working on upgrading from Sage 2016 to Sage 2018 but need to solve a problem before we upgrade.  Our company gives each employee who selects the HSA qualifying health plan a non-cash fringe of $75 for their HSA.  This is an "in and out" item in payroll - the employee is paid $75 then it is deducted to be deposited into their HSA account.  In Sage 2016 we use an earnings code of type Fringe to pay the employee, then the Fringe Benefit deduction code to deduct it (when the earnings code is entered in payroll data entry Sage 2016 automatically applies the Fringe Benefit deduction).  The earnings code is set up to be subject to state taxes but not federal, as HSA deductions are post-tax in California.  I have spent many hours "testing" the Sage 2018 tax rules and do not wish to waste any more time.  Sage Support has no clue what each tax rule does.  Does anyone know what Compensation Tax Rule in Sage 2018 taxes for state but not for federal?  Or is there some other way to set up the compensation and deduction for this non-cash fringe benefit (that will also report properly on a W-2)?

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  • 0 in reply to SKulczewski

    Although I've not tested it, I believe this issue is resolved.  John or Eliot from Sage can provide more detail.

  • 0 in reply to SKulczewski

     

    For the employee contribution, setup as a "Cafeteria Plan" and use a Tax Rule of -805082 (Health Savings Account - Cafe EE Deduction)

    For the Employer In/Out contribution to the employees HSA - Setup an earning code as type = Miscellaneous and use a tax rule of -800055 (Taxable Fringe Benefit), then Setup another Deduction as a Cafeteria Plan with the same Tax Rule as the EE (-805082), and use the "Equal to Earnings Code' putting the Earning Code setup previously.

    The Deduction Tax Rule of -805082 will reduce the amount of the contribution from Taxable wages for the Federal Taxes, but NOT California Withholding.

    Hope that helps

    Elliott