How do I record a Quickbooks Payments refund that was deducted from an unsettled balance?

I've got some steps so you can enter a QuickBooks Payments refund that was deducted from an unsettled balance, @jaredbrandon. 

Let's first create a check to record the refund amount of $666. Please take note the accounts you use for $765 and $99 before performing the steps below. 

1. Select the + New button from the left menu. 
2. Choose either Check under Vendors. 
3. From the Payee drop-down, select the appropriate customer. 
4. Select the bank account from the Bank Account drop-down. 
5. On the first line of the Category details section, choose the account you use for $765 and enter its amount. 
6. On the second line, select the account and put -99 as the amount. 
7. Click Save and close.

The screenshot below shows you the last five steps. 

Once done, you'll have to create a bank deposit to record the initial QB Payments fee of $26.26 as a negative amount. Let me guide you how. 

1. Select the + New button from the left menu. 
2. Select Bank Deposits under Other. You should see the check you entered in the Select Existing Payments section at the top.
3. Place a checkmark to choose the payment you want to deposit.
4. From the Add other funds to this deposit section, enter $26.26 as a negative amount.
5. From the Account section, choose the expense account you usually use in tracking bank fees.
6. Verify that the deposit amount is correct.
7. Click Save.

For detailed instructions, go through this article: Make Bank Deposits. 

Since you're using QB Payments, I'd suggest visiting this website: Deposits and Fees. You'll find steps on how to search for your recorded fees and deposits in the Merchant Service Center. 

I'm here anytime you have other concerns. Have a great day, @jaredbrandon. 

This is very helpful, @RaymondJayO . Thank you!

My only question is, do I need to delete the credit memo I already recorded for this customer's refund?

Hi there, jaredbrandon.

Yes, you'll need to delete the credit memo to avoid double refund to the customer. To do that, please follow the steps below.

1. Click Sales at the left panel and select Customers tab.

2. Choose customer.

3. Select the Transaction List section.

4. Find the credit memo you've created and double click it to expand the page.

5. Hit the More button at the bottom and select Delete.

6. You'll be prompted with Are you sure you want to delete it?, Click the Yes button.

For additional information,  a credit memo is a posting transaction which can be applied to a customer’s invoice as a payment or reduction. A delayed credit is a non-posting transaction that you can include later on a customer’s invoice.

A refund receipt is a posting transaction which is used when reimbursing a customer money.

Please check this article when to record a customer refund or a credit memo to the customer: Enter and apply a credit memo or delayed credit.

Please let me know if you have other concerns related with QuickBooks.