If an employee’s deductions/withholding were incorrect and it is too late to void that employee’s payroll, you can create a new payroll run using the same pay period to pay or subtract the difference between the amount that should have been paid and the amount that was actually over or underpaid. Since the employee's position was already paid in a payroll run, you will need to manually add the deduction and withholding payroll items in the payroll register and enter the value.
Deducting/withholding too much
Withholding or deducting too much will result in the employee needing a refund and for liability payments to be decreased. This might happen when there are duplicate withholding or deduction payroll items, or if the items had been set to the wrong rate. Too much was withheld from the employee and too much was paid for the liability payment.
In this case, you can create a new payroll run with a negative entry for those withholdings or deductions. This will increase the employee's net pay for the new payroll run and decrease the liability balance for the affected vendor(s).
You will first need to figure out how much was over-withheld or deducted for each payroll item and position. Then you can create a new payroll run.
To create a payroll run with a negative entry for deductions/withholdings:
- Go to Financials Main > Payroll > Payroll Runs
- Create
- Choose the Check Date
- Check the box next to Adjustment (This will allow you to add positions that were already paid to this run)
- Check the Pay Periods To Add (the same pay period that was already used)
- Save
- Register
- In the Employees tab select only the positions of the employees that need to be adjusted. Disregard the error message “Employee on another payroll run for...”
- Save
- Click the Withholding or Deductions tab
- Click the down arrow next to the employee you want to add to
- Add Payroll Item
- Select the correct payroll item from the drop-down list next to Payroll Item
- Save
- Enter the negative amount in the correct payroll item column
- Confirm everything is correct in the Summary tab
- Mark the payroll Approved
- Create Payroll Journal Entries
- Continue (disregard the message that says “The following employee positions lack a wage item”)
- Pay the Paychecks and Liabilities (see handling liabilities)
- Mark payroll run Complete
Deducting/withholding too little
When too little has been withheld or deducted from an employee's paycheck, it will result in employees receiving net pay that is too high. This might happen when deduction or withholding payroll items are not added to a position or when payroll item subtotals that should be set to increase certain withholdings are not. The extra money can be recouped by deducting/withholding extra in a future payroll run or by asking the employee to pay the money back directly.
In these cases, you can create a new payroll run for the same pay period with negative net pay and set up a payroll advance for those employees to pay back. This will also result in additional liability payments.
You will first need to figure out how much was under-withheld or deducted for each payroll item and position. Then you can create the new payroll run.
To create a payroll run with negative net pay to correct a deduction/withholding:
- Go to Financials Main > Payroll > Payroll Runs
- Create
- Choose the Check Date
- Check the box next to Adjustment (This will allow you to add positions that were already paid to this run)
- Check the Pay Periods To Add (the same pay period that was already used)
- Save
- Register
- In the Employees tab select only the positions of the employees that need to be adjusted. Disregard the error message “Employee on another payroll run for...”
- Save
- Click the Withholding or Deduction tab
- Click the down arrow next to the employee you want to add to
- Add Payroll Item
- Select the correct payroll item from the drop-down list next to Payroll Item
- Save
- Enter the positive amount in the correct payroll item column
- Follow the steps in the article Negative net pay/ Payroll advances to enable and process negative net pay, complete the payroll advance and finalize the payroll run.
Please see the article Payroll advance reimbursement for more on setting up a plan for employees to pay back the advance.