Employee Advance never repaid

@MichelleMM1 

The advance should be reported as income to the employee.  If you do it with a payroll deduction, you can offset the payroll deduction liability with the advance asset account using a journal entry - debit the payroll deduction liability, credit the advance asset account for the balance.  

I think one good way to treat the advance as income after-the-fact is to create a special deduction from net pay item that uses the advance account and then use it in the other items on a new paycheck.

To get the check right, fiddle with the gross pay amount on the paycheck until the net pay = the advance amount. Then add the advance item to reduce the check to 0.00.

Perhaps, use a bonus or other type of earnings item that does not imply hours worked.

If you can't get the net pay right exactly to the penny, the usual fix to that is to force the FWH amount by a few cents until the net amount is as desired.

what do you do if the employees passed away and we just want to writeoff?