How to refund a payroll deduction
If you have incorrectly withheld a deduction from an employee paycheck, assuming the employee has cashed the paycheck or has received a direct deposit check, the following example will walk you through how to refund the deductions.
Below is a copy of a payroll check where two deductions were erroneously withheld, one pre-tax (403b), the other is post-tax (disability insurance).
The employee Accumulations tab shows the following:
To refund the amounts on the next payroll, put a negative adjustment in for both deductions:
Process payroll as usual. The employee pay stub will show the negative deductions, and taxable gross will be correct.
Subsequently, the Employee Accumulations tab will show the following: