Over withheld WA L&I. How do you refund employees?

I'm here to provide a way to handle your over-withheld concern, @Lily24.

Right now, QuickBooks Desktop (QBDT) includes the calculation of taxes on all of the pay types you entered when creating the paycheck.

Moving forward, before creating the paychecks of your employees, please preview the paycheck by clicking the Open Paycheck Detail button. Then, edit the Regular Pay section by subtracting the other pay types from it.

As for the over-withheld amount for the past 6 months, we'll have to create a payroll adjustment for this. Please refer to this article for the detailed steps: Adjust payroll liabilities in QuickBooks Desktop Payroll.

Moreover, to refund your employee, there are two ways to do this. First is by creating a payroll item and naming it as a Reimbursement then include it in your employee's future paycheck. The second is creating a Check transaction and sending it to your employee. On the other hand, to refund your company, you'll have to make a bank deposit transaction.

I recommend consulting with your accountant about the process above for accurate recording and further assistance.  

Moreover, to have the ability to exclude the PTO when tracking tax deductions, I recommend sending feedback to our product engineers. They can analyze your request further and decide to add this feature in future updates.

1. Go to Help and select Send Feedback Online.
2. Choose Product Suggestion.
3. Complete the QuickBooks Feedback form.
4. Once done, click Send Feedback.

Additionally, you can refer to this article for the guide for preparing your tax forms: Year-end checklist for QuickBooks Desktop Payroll.

Let us know if you have other concerns about refunding your employees in QBDT. We're here to help you in any way we can.

Thank you for responding.  I have 2 follow-up questions please.

1, I'll need to make an adjustment to each employees YTD separately and then cut them a check for the amount over withheld, correct?

2. When I make the adjustments to the YTD amounts, will that put the adjusted amount back into our checking account?  

Thanks for getting back to us, Lily24. I'll address your follow-up questions about creating an employee adjustment so you can track them correctly in QuickBooks.

Yes, you're correct. You can create an adjustment per employee and enter a negative amount to offset the over-withheld in your liability accounts. Also, the adjusted amount will not go back to your checking account as it will impact the liability and expense account.

To create a payroll adjustment, follow the steps below:

1. Click Employees at the top menu bar and choose Payroll Taxes and Liabilities.
2. Tap Adjust Payroll Liabilities.
3. Enter the Date and Effective Date.
4. In the Adjustment is for section, select Employee Adjustment to correct your employee’s YTD info. Then select the employee's name.
5. Under the Item Name column, select the payroll item you want to adjust.
6. Enter the Amount of the adjustment. 
   • If the item is under-withheld, enter a positive amount to increase. 
   • If the item is over-withheld, enter a negative amount to decrease.
7. Enter the amount under the Income Subject to Tax column if you need to make a wage base adjustment.
8. Under Memo, enter a note about the adjustment for reference. 
9. Choose Accounts Affected, then OK.
   • Select Do not affect accounts to leave balances unchanged for the liability and expense accounts. The adjustment will only change the year-to-date amounts on your payroll reports.
   • Select Affect liability and expense accounts if you want the transaction to reflect in the liability and expense accounts.
10. Select OK to close the Affect Accounts window.
11. Click Next Adjustment if you have additional employees to enter an adjustment for. Otherwise, select OK to save the changes.

Upon sharing the steps above, I'd suggest consulting an accountant to ensure your books are accurate and not messing up other data. Your accountant can provide more expert advice regarding an accounting perspective.

For more details about this process, check out this article: Adjust payroll liabilities in QuickBooks Desktop.

Additionally, if you need help with removing overdue liabilities, you can refer to this article for the detailed steps and instructions: Enter historical tax payments in QuickBooks Desktop Payroll.

Don't hesitate to visit us again if you have questions about your employee's adjustment or concerns about QuickBooks. We're always here to help. Have a pleasant day ahead.