Reduce paycheck wages for an employee who has been overpaid
You may want to reduce the paycheck wage for an employee who was overpaid.
You have an active payroll subcription and have overpaid an employee on a prior paycheck.
The employee's gross pay will be corrected.
It is not advisable to adjust for an overpayment by reducing the hours a contractual employee has earned or wages to which an employee is contractually entitled. It is always important to report the hours that an employee has actually earned per timesheets, or report the salary amount an employee is contractually allowed to have. This will prevent any misunderstandings with regard to an individual's expected earnings. Rather than reducing hours, you can put adjustments on the check to reduce wages for any overpayment.
Create a Deduction Payroll Item.
- In the liability account field, enter the same expense account that was used for the original compensation item with which the employee was overpaid.
- Select tax tracking type Compensation.
- Select Calculate this item based on Quantity if the employee was paid hourly, or select Neither if the employee was paid with a salary item.
Add the new deduction payroll item to a paycheck for the overpaid employee. The deduction item must be added to a paycheck that has equal or more earnings than the amount that is going to be deducted, as QuickBooks cannot create a paycheck with a negative net pay.
Enter the amount of overpayment:
- If the employee was paid hourly, in the Rate field for the deduction, enter the rate that was used when the employee was overpaid.
- If the employee was paid salary, enter the amount of salary the employee was overpaid.
Enter the deduction, if applicable:
- If the employee was paid hourly, in the Quantity field for the deduction, enter the number of hours the employee was overpaid.
- If the employee was paid salary, leave the Quantity field blank.
Finish creating the paycheck.
This does not affect the actual overpaid hours, just the gross amount. The year-to-date totals on the payroll summary report will still show the hours as having been worked. These steps will not impact vacation hours accrued. If sick and vacation accruals need to be updated, refer to Available sick or vacation hours reported for an employee are incorrect.