For example: A pay-in-advance Medical deduction of $150 was deducted from the employee paycheck for the upcoming month of coverage. The employee quit or was terminated. We need to refund the $150 on the next/final paycheck. What is the best approach to accomplish this refund?
Answer
What is the best way to refund a prior paycheck deduction?
Best answer by pbennett
i would create a paycode and make sure the taxaction is correct to reverse what was done on the deduction. then user the paycode to refund the employee
+1i would create a paycode and make sure the taxaction is correct to reverse what was done on the deduction. then user the paycode to refund the employee
Patricia Bennett
Aaaww Yes! There is that pesky subject of taxation. This was a pre-tax deduction.
Thank you PBennett ;o)
If you wanted to use the same deduction code, you could do the last pay as an Adjustment Type and enter a negative amount as shown below.
+1Hello,
We are developing a specification to allow negative deductions in payroll. While this can increase flexibility, there are concerns about situations where a deduction could result in a negative year-to-date (YTD) balance.
The most likely scenario we see today is when negative deductions are used to create an employee loan. However, best practice would typically be to issue the loan through Accounts Payable. Our goal is to provide flexibility for customers, while also putting in guardrails where necessary.
We’d like your feedback on two specific points:
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Reason Requirement – Should the system require that a reason be entered when creating a negative deduction?
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Negative YTD Impact – If a negative deduction would cause a deduction mapped to the W-2, T4, or RL-1 to go negative YTD, would you prefer:
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To block the entry entirely, or
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To allow it, but display a clear warning about downstream reporting impacts?
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Thank you for sharing your input—it will help us shape this functionality in a way that balances flexibility with compliance and accuracy.
Sonia Echols
Technical Product Manager, Payroll
Best,
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