Overpayment of Covid sick pay on 12/31/20 paycheck

Hi ME51. 

Thanks for dropping by, I'm happy to show you how you can process the employee overpayment. Follow these steps below to create a deduction payroll item. This way, you can add it to the paycheck to reduce employee's wages for the overpayment  and correct year-to-date (YTD) taxes. Let me guide you how. 

1. Go to Lists from the top menu. 
2. Select Payroll Item List. 
3. In the Payroll Item drop-down, choose New. 
4. Select Custom Setup, then click Next. 
5. Choose the payroll item type and enter its name, then click Next. 
6. Select the same expense account that was used for the original compensation item with which the employee was overpaid in the Liability account field. Hit Next. 
7. Select Compensation as the tax tracking type, then click Next. 
8. If the employee was paid hourly, choose Calculate this item based on Quantity. If the employee was paid with a salary item, select Neither.
9. Click Finish. 
   

Second, let's add the deduction payroll item, the overpayment amount, and the hours to your employee's paycheck. Here's how: 

1. Go to Employees from the top menu.
2. Select Employee Center. 
3. Choose the employee's name. 
4. Find the last paycheck, then double-click it. 
5. Click Paycheck Detail. 
6. Go to the Other Payroll Items section, then add the deduction item you just created. 
7. If the employee was paid hourly, enter the rate in the Rate field. If the employee was paid salary, enter the salary amount that he was overpaid.
8. If the employee was paid hourly, enter the number of overpaid hours in the Quantity field. Leave the Quantity field blank if the employee was paid salary. 
9. Click OK. 

See the screenshot below to show you the last four steps. For detailed instructions, see the QuickBooks Desktop Payroll including Basic payroll, Enhanced payroll and Assisted payroll section through this article: Reduce Paycheck Wages For An Employee Who Has Been Overpaid. 

Once done, you'll have to record the repayment from your employee by entering a bank deposit. This ensures your books are accurate. If you have any other questions, feel free to post here anytime. Thanks for dropping by and I hope you have a nice weekend. 

Am I adding this payroll item deduction to the paycheck that had the overpayment on it which was 12/31/2020?

Thanks for the quick reply, @ME51.

Yes, you can add that payroll item deduction to the paycheck 12/31/2020 that had the overpayment. 

Once done, don't forget to process a bank deposit, as my colleague mentioned above. As always, you can access the Deposit Detail report to review all the recorded bank deposits.

See the sample screenshot below for reference: 

Also, I've attached some articles that might help you handle the Chart of Accounts, deposits, paychecks, and other relevant matters. 

• Learn about the chart of accounts in QuickBooks
• Deposits
• Workers and employees

Let me know in the comment section if you have other follow-up questions. I'm cheering to help further.