how do I record an overpayment of payroll deduction in Quickbooks Desktop

Hi mikeyg2020,

This is a great question. It's good you've noticed the overpayment of the payroll deductions now so that you can take care of them right away in QuickBooks Desktop to make sure your books are in balance for what you paid outside of the program. How you'll go about this will depend on a few things, such as if you've already recorded the liabilities in the software, but I'll get you started on this.

When you're using the Pay Liabilities feature in QuickBooks Desktop Payroll, the program does the work of calculating what you have to pay for you. When there are instances where what you're paying is different than what's showing on the screen, you can manually change or adjust the amounts before completing the transaction.

To manually change the numbers, you would simply change the amounts in the Amount column on the Liability Cheque when you reach that step. If you think an adjustment might be better suited to your situation, you can use that feature instead. This article goes over the processes for paying the payroll deductions: Pay or adjust payroll liabilities

If those don't work for you, you've already gone through the Pay Liabilities process, or you're not sure which is the better transaction for your books, I encourage you to check in with an accountant. One that knows QuickBooks Desktop in particular will have the knowledge to get you on track with this situation. If you don't already have an accountant, feel free to check out our Find an Accountant page to see our list of QuickBooks-certified pros near you.

Enjoy the rest of your day!

Thank you for your reply. I actually read the article: Pay or adjust payroll liabilities you referred to me before I posted here but am still unsure what to do.

I had already recorded the liabilities in the software using Pay Liabilities feature in QuickBooks Desktop before I made the wrong payment to CRA online.

You're welcome. Great job with putting in some research and finding that article already. I know it can be tricky to figure out which are the best steps to take for your situation when there are a few different options. Once again, I recommend working with an accountant from this point on, especially knowing now the additional detail that you've already recorded the transaction in QuickBooks Desktop. It could be as simple as deleting the transaction you already created through the Pay Liabilities feature and re-recording it with the amounts you actually paid or there may be a different set of steps that will be better for you. An accountant will be able to advise on this to ensure the integrity of your books.

All the best to you.

Hello @mikeyg2020 ,

I have found the best way to do this is to go back to the source document (pay cheque, presumably) where the incorrect liabilities occurred.  I edit those paycheques so the CRA liability amounts are correct for the period in which they happened, putting any net $ to the employee as either a negative Employee Advance (a current liability account set up by yourself that is NOT QB's native Advance item).  On the next paycheque, you will have to reverse the Employee Advance.  The goal here is to make the employee's net cheque amount exactly the same as it was when they got paid as obviously, that amount cannot change.

These edits will reflect in your total CRA Liability account, and will also create a "credit" or payable amount in Accounts Payable for your CRA payroll tax vendor.  On the next remittance, process as usual using Pay Liabilities for the full amount of the current period.  When you go to Pay Bills to pay the remittance amount, apply the credit or amount payable from the prior period to the payment, which will reduce or increase amount paid on this remittance.

Doing it like this makes PD7A reports for each payroll period 100% correct, even if you remitted the wrong amount.  As stated above, you will pick up the incorrect amount in either the credit or amount owing when you use Pay Bills to pay the remittance.