QB Issue Resolution:

Let’s deduct the hours for the three employees who have been overpaid from the last payroll.

In QuickBooks Desktop Payroll, you can add deduction items on the paycheck to reduce wages for any overpayment.

First, let’s create a deduction payroll item. Here’s how:

  1. Open the paycheck of the affected employee.
  2. Select the Other Payroll Item button, then choose New. Select Deduction, then choose Next.
  3. Enter the name for the deduction, then choose Next.
  4. Enter the name and the number of the agency which the liability is paid. In the Liability account field, enter the same expense account that was used for the original compensation item with which the employee was overpaid. Click Next.
  5. Select tax tracking type Compensation to adjust the year-to-date taxes that was withheld as a result of the overpayment (see
  6. Select Calculate this item based on Quantity if the employee was paid hourly, or select Neither if the employee was paid with a salary item.
  7. Click Finish when you’re done.

I’ve added screenshots below to show the second to sixth steps.

Then, let’s add the new deduction payroll item to a paycheck for the overpaid employee. Please take note the deduction item must be added to a paycheck with equal or more earnings than the amount that will be deducted; as QuickBooks cannot create a paycheck with a negative net pay.

After that, let’s enter the amount of overpayment:

  • If the employee was paid hourly, in the Rate field for the deduction, enter the rate that was used when the employee was overpaid.
  • If the employee was paid salary, enter the amount of salary the employee was overpaid.

Once done, you can enter the hours, if applicable:

  • If the employee was paid hourly, in the Quantity field for the deduction, enter the number of hours the employee was overpaid.
  • If the employee was paid salary, leave the Quantity field blank.

You can finish creating the paycheck. This doesn’t affect the actual overpaid hours, just the gross amount. The year-to-date totals on the Payroll Summary Report will still show the hours as having been worked.

For more information, you can check out the reduce paycheck wages  for an employee who has been overpaid article.

If sick and vacation accruals need to be updated on the paychecks, refer to available sick or vacation hours reported for an employee are incorrect.

Resolution for Issue 'I overpaid (3) three employees for hours that they did not work on our last payroll. How do I go about deducting those hours on the next payroll? TY' available: Yes (Solved).
Source: Intuit Community forum.

I overpaid (3) three employees for hours that they did not work on our last payroll. How do I go about deducting those hours on the next payroll? TY: this issue or error code is a known issue in Quickbooks Online (QBO) and/or Quickbooks. Support for this issue is available either by self-service or paid support options. Experts are available to resolve your Quickbooks issue to ensure minimal downtime and continue running your business. First try to resolve the issue yourself by looking for a resolution described below. If it is a complex issue or you are unable to solve the issue, you may contact us by clicking here or by using other support options.

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