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Level 2

Refunding pre-tax employee deductions and reconciling company contributions (over paid) from previous year.

Hello,

 

I have an employee who had an employer sponsored health insurance which was retroactively cancelled by them. This resulted in an over payment to the insurance agency in 2019 which has now finally refunded the over payment in 2020.

 

Can someone help me with this? I need to to handle a refund for the pre-tax employee deduction for medical for 2019.  I also now need to reconcile both the company contribution and the employee deduction that were in excess.  I assume the refunds and reconciliation goes into the 2020 books.

 

Thanks in advance for your help.

Solved
Best answer 01-27-2020

Best Answers
Highlighted
Moderator

Refunding pre-tax employee deductions and reconciling company contributions (over paid) from previous year.

Hi there, AGCorp.

 

You can create a payroll adjustment to correct the year-to-date (YTD) or quarter-to-date (QTD) of the company portion. Before doing so, run a Payroll Summary report for the quarter you need to adjust.

 

  1. Go to the Reports menu and select Employees & Payroll.
  2. Choose Payroll Summary.
  3. Set the date and click on Refresh.
  4. Remove the Hours and/or Rate columns by clicking the Customize Report button.
  5. Under the Display tab, clear the Hours and/or Rate checkboxes. Then, select OK.
  6. Locate and review the insurance item under the Employer Taxes and Contribution section.

For the detailed steps in creating an adjustment, refer to this article: Adjust payroll liabilities in QuickBooks Desktop.

 

I recommend conferring for further guidance in recording the payroll adjustment.

 

For future reference, you can use this article that will serve as guide to help prepare your tax forms: Year-end checklist for QuickBooks Desktop Payroll.

 

Reach out to us if you have further questions. We're always here to help.

View solution in original post

3 Comments
Highlighted
QuickBooks Team

Refunding pre-tax employee deductions and reconciling company contributions (over paid) from previous year.

Hi there, @AGCorp.

 

You can create payroll corrections, then submit a reimbursement check to refund your Employee.

 

The first thing you need to do is add a new payroll item. Here's how:

 

  1. From Lists on the menu bar, select Payroll Item List.
  2. Select the Payroll Item button. Then select New.
  3. Click the Addition item type. Then select Next.

Next, we can set up the new item:

 

  1. Select an expense account to track travel or mileage amounts. Or if this will be an advance to the employee, choose an asset account.
  2. Set the Tax Tracking type to None so that the amounts do not report on tax forms. Then select Next.
  3. For amounts paid per mile/kilometer, select the Based on Quantity checkbox. Then select Next.
  4. Choose to calculate net pay. Then select Next.
  5. Enter a Default Rate. Then select Finish.

 

Then let's go ahead and do the payroll checkup. QuickBooks will recalculate your payroll data. 

 

  1. Click the Employee menu and select Payroll Setup.
  2. Select Data Review.
  3. Under the question "Would you like QuickBooks to help you check your payroll data?," select Yes.
  4. Click Continue

For more details, please read out these articles: 

 

Also, I'd suggest reaching out to your accountant for further guidance about reconciling your account.

 

I'll include an article about setting up a payroll item for insurance for future reference. 

 

Please let me know if there's anything else you need. I'm always here to lend a hand. Take good care.
 

Highlighted
Level 2

Refunding pre-tax employee deductions and reconciling company contributions (over paid) from previous year.

Hello -

 

Thanks for the details. The link you included (Refund an employee for a deduction that was overwithheld)  is very useful and helps me setup the refund for the employee.

 

Can you also help me with handling the company portion of this? I.e. there was an equivalent company contribution towards the health care insurance as well as a payment made to the agency. How do i reverse both these transactions?

 

Thanks again

Highlighted
Moderator

Refunding pre-tax employee deductions and reconciling company contributions (over paid) from previous year.

Hi there, AGCorp.

 

You can create a payroll adjustment to correct the year-to-date (YTD) or quarter-to-date (QTD) of the company portion. Before doing so, run a Payroll Summary report for the quarter you need to adjust.

 

  1. Go to the Reports menu and select Employees & Payroll.
  2. Choose Payroll Summary.
  3. Set the date and click on Refresh.
  4. Remove the Hours and/or Rate columns by clicking the Customize Report button.
  5. Under the Display tab, clear the Hours and/or Rate checkboxes. Then, select OK.
  6. Locate and review the insurance item under the Employer Taxes and Contribution section.

For the detailed steps in creating an adjustment, refer to this article: Adjust payroll liabilities in QuickBooks Desktop.

 

I recommend conferring for further guidance in recording the payroll adjustment.

 

For future reference, you can use this article that will serve as guide to help prepare your tax forms: Year-end checklist for QuickBooks Desktop Payroll.

 

Reach out to us if you have further questions. We're always here to help.

View solution in original post

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