Adjust Pay for Negative Vacation Time

I'm here to ensure you're able to adjust your employee's pay for her negative vacation time, @wardchiro. This way, you can keep your payroll account accurate and effectively manage the vacation pay for your employees.

When you run your payroll, you can adjust your employee's paycheck by selecting her salary amount. Then, choose the Adjust salary this time only option. This will change the salary amount and correct the vacation overage of your salaried employee. Let me guide you how.

1. Go to the Payroll menu.
2. Select Run payroll.
3. Choose the employee's pay schedule, then click Continue.
4. Click the salary amount (in blue) for the employee in question under the Salary column.
5. Select Adjust salary this time only.
6. Enter the number of hours she went over on vacation. These hours will be unpaid and deducted from her normal salary.
7. Click Apply.
8. Continue running the payroll.

I've attached screenshots below that shows the first to seventh steps.

QuickBooks will let you update your existing vacation time policy and give an employee more hours off. If you wish to learn more about it, you can refer to each QuickBooks Online Payroll section in this article: Set up and track time off in payroll.

Also, there's a report that'll let you check the available vacation hours for each employee. It's the Vacation and Sick Leave report. Just pull it up from the Payroll section in the Reports menu.

Please let me know if you have other concerns. I'm just around to help.

Hello there...I have a salary employee that has left the company and had a negative PTO balance. I would like to deduct this from his last paycheck but unsure of the process. Do I need to create another payroll item just for this transaction? I am using QuickBooks Desktop. Thank you for your assistance.

Thank you for joining this thread, Fincon1.

We'll need to create a deduction item to track your employee's negative PTO balance. Let's go to the Payroll Item List section to accomplish this task.

Before we proceed, I recommend consulting a tax adviser or accountant first for the specific tracking type to use to ensure the accuracy of your taxes and forms. When you have the information handy, follow these steps to add the payroll item:

1. In your company file, tap the Lists menu at the top bar and choose Payroll Item List.
2. This action will direct you to a page that shows a list of the pay types added to your company.
3. From there, click the Payroll Item drop-down and select New. 
4. In the Add new payroll item window, tick the radio button for Custom Setup and tap the Next button. 
5. Choose Deduction and click Next to continue. 
6. Input the payroll item's name in the Enter name for deduction field and press Next.
7. In the Agency for employee-paid liability window, fill in the fields and tap Next to open the Tax tracking type screen.
8. Select None if it doesn't affect your taxes and forms or enter the tax tracking that's being suggested by your accountant. 
9. Press Next until Finish.

Once done, you can add the newly created payroll item to the employee's paycheck. For further information on how to set up business pay items, deductions, PTO, and perform other payroll-related tasks, go to the following article: Get started.

You save the link to the Payroll Hub in your browser for future use. It contains topics that will guide you on how to manage your workers' information, taxes, and payroll forms, to name a few.

If you have additional questions about payroll deductions or need further assistance while working in QuickBooks, leave a comment below and tag my name. I'll be right here to help you.