If your payroll liabilities have been overpaid, you may receive a refund cheque that will need to be recorded in QuickBooks. In order to properly affect payroll items and accounts, use the following steps to record the refund:
- From the Employees menu, choose Payroll Taxes and Liabilities, and then choose Deposit Refund of Liabilities.
- From the Suppliers drop-down list in the Refund Deposit for Taxes and Liabilities window, select the name of the supplier that submitted the refund cheque.
- Enter the deposit date in the Refund Date field.
- The For Period Ending date is the first day of the pay period that the refund affects. For example, if you receive a refund dated 31 August for the pay period 16 June through 30 June, enter 16 June in this field.
- Select the option that describes how you want QuickBooks to handle the deposit:
- Group with other undeposited funds puts the amount in a holding account, so that later you can enter a deposit of multiple items. (You'll still need to use the Make Deposit feature to complete the process.)
- Deposit To records the transaction directly in the account you choose.
- In the Taxes and Liabilities section, choose the (first) payroll item that this refund affects from the Item Name drop-down list.
- In the corresponding Amount column, enter the appropriate positive amount. If the refund affects more than one item, be sure to enter only the amount that applies to this item.
- (Optional) Enter a note in the Memo field. This entry will show on payroll reports that include this transaction.
- If more than one payroll item is affected by the refund, use the Tab key to move to the next line, and enter the next item and amount.
- When all the items have been entered, click OK.
When payroll liabilities have been overpaid, the liability balance becomes negative. Depositing this refund has the effect of increasing the liability balance, bringing it back to zero.