How do you enter a payroll correction to reduce an employees check when they are overpaid? I have tried multiple things and keep getting errors. You can’t have negative hours, rates, or an amount of the earnings tab…. If I do a deduction is does not correct their earnings for the year… Any suggestions on how to correct this?
Best answer by pbennett
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There are 2 ways to do this;
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Hi Gillian,
There is a lot to think about when dealing with payroll corrections. Corrections can impact many things specific to your organization's payroll configuration. Things like Union dues, PTO and banked hours, deductions, benefits and garnishments. Plus the tax effect for Federal State and local. Adjustment entries can take care of all these things.
Sometimes the easy approach may work best. If the check has not be cashed you could void it and reissue a correct payroll and payment. I would assume its too late for this. If the over payment is small amount you may want to just let it go as it might not be worth the time and energy to correct a $10 issue. Sometimes a good option is to deal with it on the next payroll. Short the employee hours over paid on the next payroll to make up the difference. This may not be an option if it was a final check on a terminated employee.
The other option would be to create a payroll Adjustment entry but this is complicated as you would need to consider and know that tax impact of the adjust that needs to be entered. The adjustment would need to account for the the reduction of taxable hours/wage amount as well as corrections to FICA, MEDI etc. The employee could write the company a check for the amount. Patricia suggests good options to handle this above.
Other considerations come into play with timing. If you have already process the vendor liability bills and made tax deposits and how you might deal with those adjustments. If the overpayment took place in one quart and your corrective action takes place in another as this can impact the reporting and filing.
Others may suggest additional options but in the end you may just have to create and post an adjustment entry in Payments and Adjustments using the transaction type adjustment.
Regards,
It was an employee in our Service Management Division and his clock out got messed up and paid him an addition 24 hours that also pushed him into OT…. talk about a mess.
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Hello Gillian,
You need to create a deduction code. when you create the new code based on how you are pulling GL accts you will need to make sure the GL acct being used deducts the amount from the same acct that was used to post the additional earnings for that employee.
Let me know if this is not clear
Patricia,
Thank you! That is what I thought you meant, I appreciate the quick response!
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