I recently ran our first payroll with this company. The deductions for insurance werent set up as pretax, which was a mistake. They should have been pretax deductions. How do I correct this on their next pay date to give them back what was incorrectly taxed?
In most payroll programs by Intuit you would set up the Ins Pre-Tax item properly and in the next check add back to the check the incorrectly setup item with the amount deducted last payroll as an addition, not deduction and then deduct the amount using the correctly set up payroll item for both weeks. That should zero out the wrong item, have 2 weeks worth in the correct item and taxes will reflect properly.
If IOP does not allow adds in deductions, you can void the original check in the books and reissue the same check with your correctly set up payroll item with the different in net pay put to "advance" or "Advance repay" and then add that deducted amount (the error in taxes) to their next check.
After you have run the payroll make the incorrectly setup payroll item as inactive so you won't accidentally use it - you can also rename it to prevent misuse (name it Do Not Use, or XXIns.)