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Resolve a payroll tax overpayment

Learn how to handle overpaid taxes in QuickBooks Online Payroll.

Are you seeing a negative tax amount in your payroll product, or have a credit notice from the IRS or state agency? We explain how to resolve tax overpayment issues.

Do you need help with an underpaid payroll tax? Check out resolve a payroll tax underpayment.

Step 1: Determine if the overpayment is valid

Not all tax overpayments are valid. The following are examples that can lead to invalid overpayments and you’ll need to fix these issues rather than resolve the overpayment:

  • Incorrectly entered tax rate
  • Incorrect liability period on a tax payment
  • Incorrectly recorded historical tax payment

The following are examples of valid tax overpayments:

  • Your tax rate decreased after a tax payment was made
  • One or more paychecks were voided or deleted after a tax payment was made
  • You made a duplicate tax payment in the same liability period

Step 2: Resolve the overpayment

If you received a credit notice for an overpaid payroll tax from the IRS or your state agency, see What to do if you receive a payroll tax notice.

You can resolve some payroll tax overpayments in your payroll product to correct your reports and tax forms.  Select your payroll plan below for instructions.

  1. Select Taxes, then Payroll Tax.
  2. Select Payments.
  3. Select Resolve overpayment. If you don’t see this option, contact us for help to resolve.
  4. Select one of the following if available:
    • Apply to a future tax payment (recommended)
    • Request a refund
  5. Select Mark as Resolved.
  6. Select Contact tax agency for next steps to get contact info for the IRS or state agency. Otherwise, select the X to close the window.
  7. Contact the IRS or your state agency to request refunds or apply taxes to future periods.

  1. Go to Taxes & Forms.
  2. In the Taxes section, select Pay Taxes to check the overpayment. Overpayments appear as negative amounts.
  3. Select Resolve Overpayment next to the negative amount. It will show you the breakdown of the taxes.
  4. If applicable, you can select:
    1. Refund - Select this option if you prefer to get a refund. Note that you still need to contact the IRS or state agency to get the actual refund.
    2. Apply to Next Period - Your overpayment will be applied to the next liability period.
  5. Select Save.

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