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Hello, Lisajbrewer.
I have a step-by-step process on how we can record the employee bonus repayment in QuickBooks Desktop.
We can record the entire transactions into three different parts. Doing this will let you calculate the total amount for the repayment and ensure your tax reports are accurate.
Though, I'd recommend reaching out to an accountant first before doing this. They can give additional details regarding the accounting part of this process, and ensure your books are correct.
First, let's create an employee's liability adjustment for the IRA deduction, social security, medicare, and state and federal withholding. This will ensure the refunded taxes will reflect correctly on your 941 reports.
Here's how:
- Go to the Employees menu, then hover your mouse on Payroll Taxes and Liabilities.
- Choose Adjust Payroll Liabilities.
- Tick Employee under the Adjustment is for: section.
- Choose the employee's name.
- Under the Taxes and Liabilities table, add the payroll items.
- Enter a negative amount (to denote a refund).
- Add the offset amount under WAGE BASE and INCOME SUBJECT TO TAX (a total of negative 4000 for each column).
- Click the Accounts Affected button, then tick Affect liability and expense accounts.
- Once done. click OK.
If you need more details about adjusting payroll liabilities, you can visit this article here.
Next, let's create a refund deposit for the liabilities. This ensures the amounts are correctly reflected on the bank account. Here's how:
- Open the Employees menu again, then hover your mouse on Payroll Taxes and Liabilities.
- Choose Deposit Refund of Liabilities.
- Add the same payroll items under Taxes and Liabilities, then enter the amounts.
- Choose the vendor where the taxes where paid to (you might have to do this on every profile).
- Select the bank account for Deposit To.
- Click the OK button when you're done.
Finally, create a bank deposit to record the remaining $2767.01 repayment amount. Simply click the Banking menu, then choose Make Deposits. Add the name of the employee under RECEIVED FROM, then choose the correct account. Click Save & Close after.
When you're ready to process their final paycheck, you can visit this article for a guide (follow the Desktop-only steps): Create final paychecks for terminated employees.
If you need to do other payroll tasks, I'd recommend visiting our QuickBooks Desktop Payroll articles. They can give useful and important details about payroll, and can guide you accordingly.
Let me know if you have concerns when recording payroll-related transactions. I'll also welcome any other questions you might have for QuickBooks Desktop.
