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Frequent Explorer **

Recording reimbursed payroll liability

Hello,

 

My boss got her annual salary as one time payment at the end of 2018. Then she refunded her annual salary back to the company because the company needed some loan. However, she already paid taxes over that salary.  She refunded to the company- the net amount she took before- and applied IRS for a tax refund. Now, IRS refunded the tax portion of the salary and I do not know how to enter it because I do not use Quickbooks payroll. I enter paycheck records as journal enteries (our accountant process payroll and I just record them on my side, 2016 Mac Quickbooks version). Hope it's clear. Thank you!

 

I will also describe it with numbers to make it easier to understand:

My boss earned $30K in 2018 and she's issued a paycheck with the net amount of $20K plus $10K taxes. Later, she refunded that net $20K back to the company and asked IRS to refund her $10K. Now, IRS refunded her $10K and I do not know how to record it. 

 

Solved
Best answer 05-24-2019

Accepted Solutions
QuickBooks Team

Re: Recording reimbursed payroll liability

Thanks for getting back to us and adding more details about your concern, @esurmen.


The resolution provided by my colleague is one of the ways on how to track this type of transaction. To keep your records correct, please enter a bank deposit again and post the amount to the correct account.

 

This is to mirror what happened the actual transactions such as liability and expenses. The steps are easy to follow.

 

Here's how:

 

  1. At the top menu bar of the company file, choose the Banking tab.
  2. Scroll down to the middle and select Make Deposits.
  3. Click on the drop-down for the Deposit to and choose the correct bank where you want to post the $20,000.00.
  4. Enter the correct date.
  5. Select the payee by clicking on the Received from drop-down.
  6. For the posting account, choose the same one you used to track the loan.
  7. You can also create a note in the Memo field. This will serve as a reminder on what happened to the transaction.
  8. Input the $20,000.00 in the Amount field.
  9. Click Save/Save & New.

You'll have to deposit the $10.000 tax refund to the tax expense account used on the journal entry. All you have to do is follow the same steps above.

 

Please know that reversing the payroll journal entry removes the amount on the reports, like the Profit and Loss and Balance Sheet.

 

To learn more about the features in QuickBooks Desktop for Mac and how this can help you smoothly run your business, check out this link: Video Tutorials.


This process should keep your records in tiptop shape. 

 

Please let me know if you get the chance to try all these suggestions. I want to make you're all set with this concern.

 

View solution in original post

3 Comments
QuickBooks Team

Re: Recording reimbursed payroll liability

Hi there, @esurmen,

 

Thanks for describing your concern for today to help me understand the issue.

 

You can deposit the $20K amount to the loan account and the $10K amount for the refund to the bank where it was deposited. Then, create an expense transaction if your employee will be receiving the funds in the future.

 

Here's how:

  1. From your Banking menu, select Make Deposits.
  2. Select the payee in the Received from field.
  3. Select the required account in the From Account field.
  4. Enter the amount in the Amount field.
  5. Click Save.

About the required account in step 3, I recommend consulting with your account. He/she might have specific instructions on which account to select for these entries.

 

For more details about making bank deposits, you can to page 153 through this link: https://qblittlesquare.com/wp-content/uploads/2018/09/QuickBooks-for-Mac-2019-1809.pdf.

 

Should you need anything else about recording reimbursed payroll liability, please let me know. I'd be glad to help.

Frequent Explorer **

Re: Recording reimbursed payroll liability

Thank you for replying me. My accountant is recording salaries and taxes by general journal entry. I already entered and cleared the total 30K payment as journal entry. When my boss decided to refund her $20K net payment, the accountant made me record the reverse of what I recorded (reverse of credits and debits) when $20K is paid. Probably she'll ask me to record $10K tax as reverse as I recorded it with $10K tax payment at first.

 

I know it's little conplicated when you read it. Thanks for your help.

 

QuickBooks Team

Re: Recording reimbursed payroll liability

Thanks for getting back to us and adding more details about your concern, @esurmen.


The resolution provided by my colleague is one of the ways on how to track this type of transaction. To keep your records correct, please enter a bank deposit again and post the amount to the correct account.

 

This is to mirror what happened the actual transactions such as liability and expenses. The steps are easy to follow.

 

Here's how:

 

  1. At the top menu bar of the company file, choose the Banking tab.
  2. Scroll down to the middle and select Make Deposits.
  3. Click on the drop-down for the Deposit to and choose the correct bank where you want to post the $20,000.00.
  4. Enter the correct date.
  5. Select the payee by clicking on the Received from drop-down.
  6. For the posting account, choose the same one you used to track the loan.
  7. You can also create a note in the Memo field. This will serve as a reminder on what happened to the transaction.
  8. Input the $20,000.00 in the Amount field.
  9. Click Save/Save & New.

You'll have to deposit the $10.000 tax refund to the tax expense account used on the journal entry. All you have to do is follow the same steps above.

 

Please know that reversing the payroll journal entry removes the amount on the reports, like the Profit and Loss and Balance Sheet.

 

To learn more about the features in QuickBooks Desktop for Mac and how this can help you smoothly run your business, check out this link: Video Tutorials.


This process should keep your records in tiptop shape. 

 

Please let me know if you get the chance to try all these suggestions. I want to make you're all set with this concern.

 

View solution in original post

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