Showing results for 
Search instead for 
Did you mean: 
Created with Sketch. Need to update your account details or payment information for QuickBooks Desktop? Click here for our step-by-step guide.
Created with Sketch. Need help running payroll? Watch our video or read the guide in our Product Tutorial.
Created with Sketch. Learn how to create and match bank rules in our video guide.
Created with Sketch. Get help with your T4A and T5018 forms.

Record a payroll liability refund cheque

Learn how to enter a payroll liability refund cheque.

When payroll liabilities are overpaid, the liability balance becomes negative. To correct this, you can create a payroll liability refund cheque, which increases the liability balance.

Run a balance report

Before you proceed, create a Payroll Liabilities Balance report. Check for credits (amounts with negative values) that match the amount of refund and the tax item.

  • If there are credits, follow the steps to enter a payroll liability refund cheque.
  • If there are no credits, do a regular (manual) bank deposit. And post it to Payroll Expense. 

Enter a payroll liability cheque


  1. From the Employees menu, select Payroll Taxes and Liabilities. Then select Deposit Refund Liabilities.
  2. Select the name of the supplier who submitted the refund cheque.
  3. In the Refund Date field, enter the deposit date.
  4. In the For Period Beginning field, enter the first day of the pay period that the refund affects.
  5. Select how you want QuickBooks to handle the deposit:
    • Group with other Undeposited funds: Adds the amount in a holding account. And lets you enter a deposit with multiple items. This option requires you to use Make/Record Deposit to complete the process.
    • Deposit To: Records the amount to the account of your choice.
  6. In the Taxes and Liabilities section, select the payroll item/s affected by the refund.
  7. In the corresponding Amount column, enter the positive amount.
  8. (Optional) Enter a note in the memo field.
  9. Select Ok.
  10. If you are using Basic, Standard, or Enhanced Payroll for US. Or the payroll offering for Canada, the process is complete.

If the taxing agency withheld a portion of the refund for a separate balance due:

  1. Complete Steps 1 to 11. (In the Deposit total field, enter the full amount of tax refund.)
  2. To account for the portion that was withheld, enter a Liability Adjustment to reduce the liability.

If interest was paid to you on the cheque...

Do not include that amount in the Deposit Refund of Liabilities. Follow these steps instead:

  1. Complete Steps 1 to 5.
  2. Choose Group the deposit with Undeposited funds.
  3. In the Deposit total field, enter the amount of the refund minus the interest paid.
  4. Complete Steps 7 to 9.
  5. Create a Deposit for the interest and add the amount in Undeposited Funds. This will allow you to make one deposit with both payroll liabilities and interest included.

Was this helpful?

You must sign in to vote, reply, or post