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    Direct Deposit rejected

    Article ID: 1000700


    A direct deposit may be rejected due to the following reasons:

    • Invalid bank account
    • Closed bank account
    This article will guide you what to do in case an employee informs you on the expected posting date that the direct deposit did not credit to their payroll account, or if you get a payroll reject notification from Intuit.


    Check the status of the payroll to confirm the direct deposit rejection.

    Verify if your were able to send payroll for the employee, and check the status of the payroll you have sent. Send a zero payroll. See When do direct deposits post?

    Verify the employee's direct deposit information.

    Note: Intuit sends the payroll using the employee's bank account information in your QuickBooks when you created the payroll or paychecks. Changing the direct deposit information in the employee record will not affect any paychecks created prior to the edit.

    To view and update the employee's direct deposit bank account information:
    1. From the QuickBooks Employees menu, choose Employee List.
    2. Double-click the name of the employee whose payroll information you want to change.
    3. Select the Payroll Info tab.
    4. Click Direct Deposit.
    5. Review and if necessary, update the Routing No. and the Account No. fields.
    6. Click OK twice.

    If the account information is incorrect, you will need to contact your employee's financial institution.

    The employee's financial institution will be able to determine if the incorrect bank account number is for a live account.
    • IMPORTANT! If the incorrect account number is for a live account, initiate the direct deposit reversal immediately to ensure a better chance of recovering the funds. See Reverse a direct deposit transaction
    • If the incorrect account number is invalid or does not exist and the bank confirms that the payroll will be rejected, you will get a reject notice from Intuit as soon as the bank rejects the credit.
    • If the employee has already closed the account, the employee's financial institution will also determine if the payroll will be rejected, or if it will be credited to the employee's new account with the same bank.

    Create a check for the employee.

    To create a regular check:
    1. From the Banking menu, click Write Checks.
    2. Enter the date as the date of the original paycheck.
    3. On the check, in Pay to the Order of, select the employee for whom to issue the check.
    4. In the $ (amount) field, enter the net amount of the direct deposit.
    5. On the Expenses tab, in the Account column, select Direct Deposit Liabilities. (Click Cancel if prompted to pay payroll liabilities.)
    6. Select To be printed located to the right below the check.
    7. Click Save & Close. Since this is a paper check, it does not need to be transmitted to Intuit.

    An alternative procedure is to change the direct deposit paycheck to a manual paycheck for printing (not recommend for Assisted payroll as it may affect other accounts):
    1. Choose Banking > Use Register.
    2. Double-click the direct deposit check.
    3. Click the Paycheck Detail button.
    4. Uncheck the Direct Deposit option on the upper right.
    5. Click OK.
    6. Verify that there is a dollar amount on the check before printing the check.
    7. Give the check to your employee.

    To resend the employee's paycheck via Direct Deposit (additional fees may apply):
    1. Void the rejected Direct Deposit paycheck.
    2. To recreate the paycheck, choose Employees > Pay Employees. Run an Unscheduled Payroll.
    3. Enter the check date and pay period to match the voided check.
    4. In the Preview Paycheck window, ensure that Use Direct Deposit in the upper right corner is checked.
    5. Recreate the check as it was before by entering hours, salary, and/or other payroll items.
    6. Click Create to record the check.
    7. Send the payroll data to Direct Deposit.

    Connect to Intuit to enter a deposit to offset the rejected payroll.

    After receiving a reject notice from your employee's bank account, Intuit will create a deposit to your Direct Deposit Liabilities chart of account. Send a zero payroll to see the deposit. If the deposit does not appear in the Direct Deposit Liabilities account it will be entered into the register the next time payroll is sent.

    Note: Once the zero payroll has been successfully completed, the Payroll Confirmation Report will not contain the information of the direct deposit reversal. To find the direct deposit return information, you need to look in the bank register. The direct deposit return will have the same date as the day the Direct Deposit was rejected back to Intuit and will post to the Direct Deposit Liabilities chart of accounts register.

    If you are still not able to see the deposit in your QuickBooks after getting the payroll reject notice from Intuit, you will have to manually enter a deposit.

    To manually enter a deposit in QuickBooks for the rejected payroll:
    1. Go to Banking > Make deposit.
    2. Click the Deposit To list and choose the bank account you want to deposit into.
    3. In the Date field enter the date the rejected funds were returned.
    4. In the Received From column, choose the QuickBooks Payroll Service vendor.
    5. In the From Account field enter the Direct Deposit Liabilities account.
    6. In Memo enter the employee name.
    7. In the Amount field enter the amount of the rejected direct deposit.
    8. Skip Chk No, and choose a method of payment and a class if you use class tracking.
    9. Click Save & Close.
    10. Check the Direct Deposit Liabilities balance to confirm that it is now correct.
    If you would like to associate this deposit to the individual employee, you can locate this transaction in the register and add the Employee name to the Payee line.

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