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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?
Welcome to the Community, EagleSPB.
I'd be glad to walk you through in processing a refund for your employee's deduction over withheld health insurance.
Here's how:
Once added, this payroll item will appear in the Pay column when creating a paycheck for the employee.
Here's an article that will help you check with employee's reimbursements in Quickbooks Online: Reimburse an employee
Feel free to post again here if you have follow up questions.
Thanks for the prompt reply, GlinetteC.
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.
Thanks again.
Hello there, EagleSPB,
I recommend contacting our QuickBooks Online Support Team. They'll be able to help you in adjusting the liabilities and be able to review and check your payroll securely.
Stay in touch with me if you have additional questions about payroll in QuickBooks Online.
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