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WWPlumbing
March 8, 2021
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Refund terminated employee health insurance deduction

  • March 8, 2021
  • 1 reply
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The manager terminated an employee who was eligible for health insurance April 1st.  The last two paychecks had health & dental deductions.  I had already processed his direct deposit paycheck this morning, not knowing the employee was terminated last week when I was gone.  This paycheck, essentially is his final check.  How do I reimburse the employee for the deductions made in his last two paychecks, totals $148.06.  I am using Desktop Pro 2018.   In my mind, I would simply write a check to the employee, crediting the liability accounts but I am guessing this would mess up the liability balances between the balance sheet & the payroll module.

 

Thanks

Dotti

    Best answer by IamjuViel

    Hello there, @Dotti.

     

    You can create a reimbursement payroll item to track and account your employee's health insurance deductions. I can guide you in doing so.

     

    Here's how: 

    1. Go to the List menu.
    2. Choose the Payroll Item List.
    3. Click the Payroll Item button, choose New.
    4. Select Custom Setup, click Next.
    5. Pick Addition from the item type list and click Next.
    6. Choose an expense account. This allows you to set up an account to track the money you owe the employee for reimbursements.
    7. Set Tax Tracking to None and click Next. 

    8. Select the option to Calculate on Net Pay and click Next.

    9.  Enter the default rate and click Next.

    Once completed, you can assign the reimbursement payroll item to the employee's record under the earnings column.

    1. Click the Employees menu.
    2. Choose the Employee Center.
    3. Double-click on the Employee's information.
    4. Pick the Payroll Info tab.
    5. Click the drop-down menu for Additions, Deductions and Company Contributions. 
    6. Select the item from the list that you wish to add to your employee's paycheck.

    Now, you can run a second paycheck solely for the reimbursement. By doing this, you can make sure that the liability balances are tracked accurately.

     

    Get back to us here if you have other questions or concerns. I'm always here to help.

    1 reply

    IamjuViel
    IamjuVielAnswer
    March 8, 2021

    Hello there, @Dotti.

     

    You can create a reimbursement payroll item to track and account your employee's health insurance deductions. I can guide you in doing so.

     

    Here's how: 

    1. Go to the List menu.
    2. Choose the Payroll Item List.
    3. Click the Payroll Item button, choose New.
    4. Select Custom Setup, click Next.
    5. Pick Addition from the item type list and click Next.
    6. Choose an expense account. This allows you to set up an account to track the money you owe the employee for reimbursements.
    7. Set Tax Tracking to None and click Next. 

    8. Select the option to Calculate on Net Pay and click Next.

    9.  Enter the default rate and click Next.

    Once completed, you can assign the reimbursement payroll item to the employee's record under the earnings column.

    1. Click the Employees menu.
    2. Choose the Employee Center.
    3. Double-click on the Employee's information.
    4. Pick the Payroll Info tab.
    5. Click the drop-down menu for Additions, Deductions and Company Contributions. 
    6. Select the item from the list that you wish to add to your employee's paycheck.

    Now, you can run a second paycheck solely for the reimbursement. By doing this, you can make sure that the liability balances are tracked accurately.

     

    Get back to us here if you have other questions or concerns. I'm always here to help.

      W
      WWPlumbingAuthor
      March 9, 2021

      Thank you!  I did follow your process and was able to print a check to reimburse the employee for the amount deducted in the two paychecks.  However, it occurred to me, shouldn't the liability accounts be reduced by the amount the employee contributed to the insurance premiums?  ie...if I withheld $22 in total during March for the April dental premium, the $22 would have gone to the liability account.  I can't leave this in the liability account.  I will look at doing a payroll liability adjust account.  Hopefully, I can offset the expense account I attached to the reimbursement payroll item I created.  Thanks again for your help.  I would have been lost in how to even start the process.

       

      Dotti

      S
      sescarpa1
      August 9, 2021

      HI - I am up against the exact same thing. One of our employees moved and his final paycheck did not account for the $260 co-pay he paid towards his health insurance.  I simply created a new paycheck where I zeroed out the salary so that there were no earnings, then in "Other Payroll items"  - Health insurance withholding (the account always used for the deduction) and created a positive deduction. I adjusted the company and employee summary to zero out any taxes withheld. This created a paycheck for the net pay $260, which I am able to direct deposit, rather than mail a check.

       

      I am hoping this makes his final w-2 accurate and doesn't mess me up with quarterly tax reports.

       

      I'd love any feedback!

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