How do I hold a credit for a customer when they have over paid on an invoice?

Hi troy31,

There are two ways to handle credit notes in QuickBooks Online. You can create a credit note to immediately reduce a customer's current balance. Or you can enter a delayed credit so they can use it in the future.

If the customer has overpaid and entered the same amount received in QuickBooks Online, you do not need the credit note as you will already have an unapplied credit that acts as your credit note.

1. Select + New and select Expense.
2. In the Payee field, select or enter the desired customer.
3. In the Payment account field, select the bank the money is being refunded from.
4. In the Category field, select the Debtors account (Accounts receivable).
5. In the Amount field, enter the amount of the refund.
6. In the Tax field, select the appropriate Tax (not inclusive/exclusive of tax).
7. Select Save.
8. Next, go to + New and select Receive payment.
9. Add the Customer and choose the Payment method and Deposit to.
10. Balance should be 0 as they will cancel each other out.
11. Select Save and close.
12. If you have Online Banking, go to Banking tab, then match the record found on the Bank transactions (Take me there) page.

For your reference, you can check on these articles: 

Create and apply credit notes or delayed credits in QuickBooks Online

Handle supplier credits and refunds in QuickBooks Online

Let us know if you need further assistance with recording a customer credit. I'll be around to help.