I am trying to refund an overpayment on a customer's account. I have followed the instructions for recording the refund, but credit is still there.

Hi @windsor1 thanks for posting in the community.

I'm here to guide you on how to record these transactions in QuickBooks Online (QBO).

First, you need to issue a check to your customer using the Accounts Receivable account for the overpayment amount. Then, create a payment and select the check recorded and the existing credits.

Here's how to enter the check:

1. Open your QBO account, then select Check from the New (+) icon.
2. Pick the customer's name under the Payee section.
3. Under Category select Accounts Receivable, then enter the overpaid amount.
4. Save the check.

Once completed, follow these steps to link the check and the unapplied amount.

1. Open your customer's transaction list.
2. Click on the drop-down arrow under New transaction and choose Payment. 
3. On the Receive Payment window, select the check under the Outstanding Transactions section and the Unapplied Payment under the Credits.
4. Hit Save and close.

Here's another way that you can record the transaction as well.

After you've entered an Invoice, you'll need to record a Receive Payment transaction from the + New button or locate the Invoice from the Sales tab and hit Receive payment within the Action column. In the field for Amount received, enter the exact amount that the customer received. If for example, your customer paid $100 towards a $50 invoice, enter the $100. Once you enter the amount you can scroll down to see two amounts at the bottom: Amount to Apply is the amount that the customer paid that's being applied toward the invoice, and Amount to Credit is the overpayment that's being recorded and can be applied towards the next Invoice you send to that customer.

You can also check this article for other tips on how to handle a customer credit or overpayment in QBO

Feel free to reach out again if you have further questions