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kb111
December 28, 2024
Question

Correct payroll deduction which should not have been deducted

  • December 28, 2024
  • 1 reply
  • 0 views

I have Quickbooks Desktop assisted payroll. I need to correct a deduction for an employee contribution to an HSA account in a payroll I ran earlier this month. I deducted a pre-tax deduction for an HSA from an employee's paycheck by mistake. I need to correct my payroll liability and reimburse the employee the amount. I know the employee with not get the full amount as I need to make sure the reimbursement gets taxed (as it was previously taken out pre-tax). I found some previous threads which seemed to describe something close to my problem and were somewhat helpful but now I can't seem to find them again. But I had some additional questions too.
-When setting up a new payroll item which I plan to call "Reimbursement for Employee HSA deduction", I am not sure how what expense account to have this payroll item affect? I assume just "Payroll liabilities"?
-And when setting up the item, I am not sure what to choose under tax tracking type. Would it be
"compensation" which is one of the options? Since I definitely need it to be taxed, so as long as all those taxes are checked on the payroll item set up page, then when I use this payroll item when I run a payroll, will it automatically take taxes out?
-Lastly, I do not need to issue this employee anymore regular paychecks as he is no longer an employee of ours. Can I just run a paycheck with the addition payroll item for the reimbursement chosen or do I need to do something different since he will not have any hours worked?
Thank you in advance.

1 reply

M
Mark_AG
December 28, 2024

Hello there, @kb111.

 

I understand you need to correct an incorrect HSA deduction from an employee's paycheck and reimburse them. I'm here to provide you with information about these and assist you with the process.

 

Here's how to set up and manage a payroll item in QBDT:

 

  1. On the top menu, go to Employees.
  2. Select Manage Payroll Items and choose New Payroll Item.
  3. Follow the steps on-screen to proceed with creating your payroll item. You'll need to consult your accountant to ensure your accounts are tracked properly.
  4. Head to Employees, Manage Payroll Items and select View/Edit Payroll Item List.
  5. Find the payroll item you recently created and double-click it.
  6. Now you can choose the expense account for your payroll item.
  7. Continue the edit to track tax type and Finish.

 

Then, you can issue a separate check to the employee for the net reimbursement amount (gross amount minus taxes withheld). Since the employee is no longer employed, you won't enter any hours worked. QuickBooks will still calculate and withhold the appropriate taxes based on the reimbursement amount.

 

It's crucial to consult with your accountant or tax advisor for guidance on choosing the best tracking tax type in QuickBooks Desktop.

 

Payroll regulations and best practices can be complex, and your accountant can ensure the correction is recorded accurately in your books and that you comply with all applicable tax laws.

 

Moreover, you can also consider adding or changing the pay types of your employees in QBDT Payroll.

 

Let me know if you have additional concerns besides reimbursing an employee in QBDT Payroll. We're always here to assist you.

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