cancel
Showing results for 
Search instead for 
Did you mean: 
QuickBooksHelp
Intuit

Reduce paycheck wages for an employee who has been overpaid

Sometimes, employees get overpaid which results in an incorrect amount on their gross pay. This article will guide you through the steps for correcting an employee overpayment.

Note: 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 important to report the hours that an employee has actually earned per timesheets, or report the salary an employee is contractually allowed to have. This will prevent any misunderstandings with regard to an individual's expected earnings.

Select your payroll service for step-by-step instructions:

QuickBooks Desktop Payroll including Basic payroll, Enhanced payroll and Assisted payroll

In QuickBooks Desktop Payroll, rather than reducing hours, you can add deduction items on the paycheck to reduce wages for any overpayment.

  1. Create a deduction payroll item.
    1. In the liability account field, enter the same expense account that was used for the original compensation item with which the employee was overpaid.
    2. Select tax tracking type Compensation.
      Note: Select Compensation to adjust the year to date taxes that was withheld as a result of the overpayment.
    3. 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.
  2. Add the new deduction payroll item to a paycheck for the overpaid employee.

Note: The deduction item must be added to a paycheck with equal or more earnings than the amount that will be deducted, as QuickBooks cannot create a paycheck with a negative net pay.

  1. 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.
  2. Enter the hours, 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.
  3. 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.

Overpayments on termination checks

If the overpayment is on a termination check, you will need to void and recreate the check. Before you begin, make sure to collect the over paid amount from the employee and that it is still in the current quarter. This will ensure you are not reporting less wages than what the employee received.

  1. Select Employees inside QuickBooks, then choose Edit/Void Paychecks from the drop down menu.
  2. A list of the most recent paychecks will appear. To void the check, select it and select Void.
  3. Once the check has been voided select Done to close the page.
  4. To see if the employee is active, select Employees, then go to Employee Center.
  5. Above the employee list, select the Active Employees drop down menu and change it to All Employees.
  6. If there is an X next to the employee name, select it once to make them active again. If there is no X, proceed to the next step.
  7. Recreate the check with the correct information. Select Employees, then Pay Employees and then Termination Check.
  8. In the list of employees, select the checkbox next to the employees name then choose a Release Date in the box following their name. Enter the correct hours that the employee worked.
  9. Once the corrected hours have been put in, create the paycheck.
    • For assisted payroll, make sure to send the payroll information in order to process the taxes.

QuickBooks Full Service Payroll

If the Paycheck for your employee has not been submitted or is before the pay date, you can just edit the Paycheck.

If the Paycheck for your employee has been submitted and is past the paycheck date, please contact us.

Intuit Full Service Payroll

Approved paychecks

  1. On the Home page, select View Paycheck List under the current months calendar.
  2. Check the box next to the paycheck(s) in question.
  3. When all the incorrect checks are selected, go to the bottom of the list and select Delete.
  4. After deleting, select the Payday tab to begin recreating the checks.
  5. In Payday, you can enter the correct hours or adjust the salary for the employee. This is done in the same manner as when you first created them.
    • If you have multiple schedules, select the appropriate pay-schedule for the employee who needs a paycheck correction.
    • If you have employees in multiple schedules, return to Payday and repeat step 5 after you complete each check.
  6. Enter the information, select Create Paychecks then choose Approve Paychecks.
  7. Review the paychecks in the Paycheck List to see if no further changes are needed.

Paychecks waiting to be approved

  1. From your Home page, select Payday. An alert with the names of each employee(s) unapproved check will appear.
  2. Select Approve to the right of the alert to open a list of the checks to be approved.
  3. Select View/Edit to the right of the employee(s) check summary. This will pull up the paychecks details.
  4. Select edit again at the bottom of the check.
  5. Make the changes to the salary or hours and select Save. If any are still incorrect, then repeat steps three to five.
  6. If all checks are correct, select Approve Paychecks.

If it is past the check date, please contact us to make changes to the paycheck.

Intuit Online Payroll

Prior Quarter and Prior Year

Contact Payroll Support for assistance

Current Quarter

To reduce paycheck wages, you may deduct the amount you over paid to the next payroll run or do the following:

  • Processed direct deposit paychecks:
    1. Contact Payroll Support to void the check.
    2. Once negated, recreate the check with the correct amount.
  • Unprocessed direct deposit paychecks:
    1. Delete the paychecks.
    2. Once deleted, recreate the check with the correct amount.
  • Approved manual paychecks
    • If paycheck is the most recent, delete and recreate the paycheck.
    • If not the most recent, it's the same process as processed direct deposit paychecks/
  • Unapproved manual or direct deposit paychecks:
    Edit paychecks in Online Payroll

QuickBooks Online payroll

Prior Quarter and Prior Year

Contact Payroll Support for assistance

Current Quarter

To reduce paycheck wages, you may deduct the amount you over paid to the next payroll run or do the following:

  • Processed direct deposit paychecks:
    1. Void the paychecks.
    2. Recreate the check with the correct amount.
  • Unprocessed direct deposit paychecks:
    1. Delete the paychecks.
    2. Once deleted, recreate the check with the correct amount.
  • Approved manual paychecks
    • If paycheck is the most recent, delete and recreate the paycheck.
    • If not the most recent, it's the same process as processed direct deposit paychecks
  • Unapproved manual or direct deposit paychecks:
    Edit paychecks in Online Payroll

Was this helpful?

You must sign in to vote, reply, or post

Need to get in touch?

Contact us
Sign in for the best experience
Ask questions, get answers, and join our large community of QuickBooks users.
Sign In / Sign Up