Flex Spending Accounts

[lizzie]

I am setting up our employees for Flex Spending, but I'm not sure I've set it up right. I added an item called Flex Spending under the Maintain Item Descriptions in Payroll, and highlighted item type Income and taxable income Yes. Under the W2 information, I highlighted Social Security Wages and Medicare Wages and tips. Then I added an item called Flex Spending Deduction and highlighted item type Deduction. I didn't do anything under W2. Can someone let me know if I did this right?

[Matt]

Normally contributions to Flex Spending accounts are done on a pre-tax basis. As such, they need to be set up as non-taxable income. To set them up as non taxable income you need to reduce the taxable income pay item for the employee and set up a non-taxable income pay item.

For example, let's say the person's salary is $1,000 and they want $50 to go to their Flex Spending account. You would have a taxable income pay item for $950.00 and a non-taxable income pay item for $50.00 for the employee. Then you would set up a deduction pay item to deduct the $50.00 from the employee's pay.

[lizzie]

:( I'm still having trouble with the flexible spending. I thought I had it correct, but my checkbook balance came up 20.00 more than the balance sheet. The employee has 10.00 taken from each check. I adjusted the Employee pay items, and apparently did something right because now the checkbook balance is 10.00 more than the balance sheet. Can I send a screenshot of the transaction entry as well as the employee pay items that I've set up? The Powerchurch support site just has an example of how to set up employee pay items for a 403B account and I don't think it would be exactly the same. Also, do I need to set up a separate account number for the Flex spending deduction as well as the Flex spending income? I seem to be having trouble doing that as well. :oops:

[Matt]

Sure. Just click on the email link below and I will be happy to take a look at it for you. It would also be very helpful if you could run the Preview of Paycheck items report for the employee and also run the Item Descriptions report and attach both reports to your email along with the screen shot. When you run the reports please save them as Adobe PDF files.