Handle a direct deposit paycheck that was not received by an employee

You or your employee may contact the receiving bank to check whether the incorrect bank account exists or not.

• If it’s a Live Account (it deposited successfully), request a direct deposit reversal 5 business days from the pay date (the paycheck date counts as the first day) but this doesn’t guarantee that the funds will be recovered.
  1. Wait until the reversal is completed. 
  2. You can pay your employee with a regular check while waiting for the reversal to be completed. 
  3. Once you already have the result, update your employee’s bank account.
• If the account Doesn't Exist or Closed, and it was confirmed that the deposit is rejected:
  1. Void the paycheck
  2. Update the employee’s bank account
  3. Recreate the paycheck and send a new direct deposit

Note: The rejected amount will be credited back to your company’s payroll account.

If the bank account is owned by another employee, here are your options to recover the funds:

• Option 1: Make an internal arrangement with the employee who owns the bank account to return the funds by cash, check, etc.
• Option 2: Request a direct deposit reversal. You can request a direct deposit reversal 5 business days from the pay date (the paycheck date counts as the first day) but this doesn’t guarantee that the funds will be recovered.
  1. Wait until the reversal is completed.
  2. You can pay your employee with a regular check while waiting for the reversal to be completed. 
  3. Once you already have the result, update your employee’s bank account.

For a better experience, open this article in QuickBooks Online. Launch side-by-side view

Here are your options to pay your employees

Option 1: Pay your employee with a check

Hand your employee a check, then contact us to void the rejected direct deposit paycheck in your QuickBooks. 

Once the paycheck has been voided, you can create a manual paycheck to record the check you’ve given to your employees. Don’t forget to turn off the direct deposit for this check.

Option 2: Send another direct deposit paycheck

If you choose to send another direct deposit check to your employee, make sure that:

• the rejected paycheck has been voided
• you’ve updated the employee’s bank account info if it’s incorrect

Note: If you’ve requested to reverse the direct deposit paycheck, you may need to wait for the result before you update the employee’s bank info.

These are the options that’ll help you get your employees paid.

Option 1: Create a regular check

1. Go to Banking, then select Write Checks.
2. Enter the date as the date of the original paycheck.
3. In Pay to the Order of ▼dropdown, select the employee you want to issue a check with.
4. In the $ field, enter the net amount of the direct deposit paycheck.
5. On the Expenses tab, select Direct Deposit Liabilities in the Account column. Select Cancel if prompted to pay payroll liabilities.
6. Select Save, then Print.

Option 2: Change the direct deposit paycheck to a manual paycheck to make it printable

QuickBooks Desktop Payroll Assisted doesn’t allow this option as it may affect other accounts.

1. Go to Banking, the select Use Register.
2. Select the account you use for DD from the dropdown ▼, then select OK.
3. Double-click the direct deposit paycheck.
4. Select Paycheck Detail to open the paycheck.
5. Clear the Use Direct Deposit option.
6. Select OK.
7. Verify that there is a dollar amount on the check, then select Print.

Option 3: Resend the employee's paycheck via Direct Deposit 

Note: If you use Assisted Payroll, and the paycheck is dated in a prior quarter, contact us.

1. Void the rejected Direct Deposit paycheck.
2. Update or change your employee’s direct deposit info.
3. Recreate your employee’s paycheck.

When you void the rejected paycheck, the voided transaction will flow into your QuickBooks Online register or chart of accounts.

If you’re using Core, Premium, or Elite without the accounting turned on, also known as Standalone Payroll, you’ll need to export the voided transaction into your QuickBooks Online or QuickBooks Desktop to fix your books. You can also create a journal entry to fix your books.

When a direct deposit is rejected, Intuit will create a deposit to your Direct Deposit Liabilities chart of account. Send a zero payroll to see the deposit. If it still doesn’t appear, enter a deposit manually.

1. Go to Banking, then select Make Deposits.
2. In the Deposit To ▼dropdown, select the bank account you want to deposit into.
3. In the Date field enter the date the rejected funds were returned.
4. In the Received From column, select QuickBooks Payroll Service.
5. In the From Account field, select the Direct Deposit Liabilities account.
6. In Memo enter the employee name.
7. Select a payment method and a class if you use class tracking.
8. In the Amount field enter the amount of the rejected direct deposit.
9. Select Save & Close.