An employee's health insurance coverage was terminated retroactively, and the employee had payroll deductions (pre-tax) taken for the insurance after coverage had ended. The support article "Refund an employee for a deduction that was overwithheld" explains how to handle this in Desktop Payroll, by entering a negative amount for the deduction on an individual paycheck.
However, I'm not sure it's possible to enter a negative deduction in Online Payroll, or to override a deduction amount on an individual paycheck. If not, what is the correct way to return the funds to the employee such that W-2 and taxes will be correct? Should I use the Other Earnings pay type?
A reimbursement would certainly get the employee's money back to her. However, the solution in the post I linked to "adds the amount back to the employee's gross or net wages so their earnings are taxed properly and their Form W-2 is correct." I don't believe a reimbursement would do that.
Better that the employee be under-taxed than over-taxed, I suppose, but I'd like to get the taxation part correct.