Depending on your payroll’s processing status, you can edit, cancel, or reverse employee payrolls and contractor payments in Gusto. This helps correct mistakes and keep payroll records, taxes, and reports accurate.
If you have not submitted payroll yet
Go to Run a regular payroll to make changes before submitting. Payroll can always be edited prior to submitting.
If you want to adjust wages or settings going forward
No need to cancel or reverse. Update the relevant settings (like compensation, benefits, or taxes) and the changes will apply to your next payroll.
Your options depend on your payroll’s current status:
Payroll status
What you can do
Submitted, not yet debited
Cancel and resubmit
Debited and processed
Reverse; reprocess as off-cycle if needed
Debited, check date passed by more than five business days
Important: A payroll is processed once we debit your bank account for net payroll and taxes. This happens at 4 pm PT on the debit date — not when you submit.
Not sure if your payroll has been debited? Go to Pay, click View pay history, and find the payroll by check date. A red Cancel button means it has not been debited yet. If you only see Make changes, it's already been debited and processed.
Most payroll mistakes can be fixed without a reversal. Use this table to find the right path for your situation.
Situation
Recommended solution
Underpaid a team member
Run an off-cycle payroll to pay the difference.
Overpaid a team member
Correct on future payrolls with help from this article.
Correction payment needed
Run an off-cycle payroll.
Skip payroll for one or more team members
Skip the payroll run before it processes. For Payroll on Autopilot, you must wait until the week before it processes to skip.
Someone shouldn't have been paid at all
Reverse the payroll. In the What's the problem? section, select Someone was overpaid, then select Someone shouldn't have been paid at all.
Change from direct deposit to check
Reverse the payroll. In the What's the problem? section, select Some information was wrong, then select We used the wrong payment method (direct deposit vs. check).
Pay period adjustment needed
Pay periods are for tracking only and do not affect taxes or filings. We do not recommend reversing payroll for a pay period adjustment — doing so may require re-debiting taxes and pulling funds back from your team members, which creates more problems than it solves. If you need to correct the pay period for record-keeping purposes, rerun it as an off-cycle payroll. For closed quarters, use a non-Gusto payroll.
Wrong bank account number for a team member
Reverse the payroll. In the What's the problem? section, select Some information was wrong, then select We entered the wrong bank account number.
Incorrectly entered hours (PTO, holiday, or sick)
Manually update time-off balances. This does not affect taxes.
Non-Gusto or historical payroll reversal
Wrong work address for a team member
Update the team member's work address in their profile. Tax corrections will be flagged if needed. Do not reverse the payroll.
Incorrect tax withholding
Reversing a payroll for a tax withholding issue is rarely the right solution. Here's why:
Federal and state income tax withholding are estimates. The final amount owed is determined when the team member files their tax return.
If taxes have already been paid to the agency, we cannot recover those funds.
The agency may issue a refund or credit at the end of the quarter, but this is not guaranteed.
Instead, choose one of these options:
Update W-4 elections going forward — the team member can update their W-4 to correct withholdings on future payrolls. Since the team member files their own taxes, this is the recommended path in most cases.
Make a one-time correction — the team member can update their W-4 before the next payroll runs, then change it back to the original elections afterward.
No action needed — since withholding is an estimate, the team member can reconcile any federal or variable state withholding discrepancy when they file their tax return. States with a flat withholding rate do not have elections to adjust.
Read this section before you act. Reversing when it is not necessary — or reversing incorrectly — can make a payroll mistake harder to fix.
The five business day mark after your check date affects several parts of a reversal:
Within five business days of check date
After five business days
Direct deposit reversal
You can attempt a reversal (one attempt only). The bank will try to recover funds within one to two business days. If successful, we'll return funds to your account within five to seven business days. If unsuccessful, work directly with the team member to recover funds.
You will need to reach out to Gusto to reverse and work directly with the team member to recover funds.
401(k) contributions
Most providers adjust automatically with little extra work on your end.
Contact your 401(k) provider directly to find out what can be changed.
Tax payments
Taxes may not have been paid to the agency yet.
Taxes have likely already been paid. The agency may issue a refund or credit at the end of the quarter, but this is not guaranteed.
Payroll reporting
Gusto will update tax amounts and wages.
Gusto will update tax amounts and wages.
Before submitting a reversal, let the affected team member know. A reversal pulls funds back from their bank account, which can cause overdraft fees or confusion.
Sample message to send:
Hi [Name] — We identified an error in the [date] payroll and will be reversing it. Your bank may show a debit of approximately [amount] within 1–2 business days. We will issue a corrected payment once the reversal processes, typically within 5–7 business days. Please reach out if you have questions.
You are not required to notify the team member within Gusto — this is a courtesy step, but it reduces inbound questions to your HR team.
Important: We can only attempt to pull back funds from an employee once. If we are unsuccessful, you will need to work with your employee to recover the funds outside the system, or add a post-tax deduction for the net pay.
Benefit deductions
If your payroll includes other benefit deductions, those amounts will likely need to be collected on a future payroll. See the benefit corrections article for help.
Gusto-managed Health Savings Account (HSA) and Dependent Care Flexible Spending Account (DCFSA) contributions cannot be reversed. Contact Gusto support for help.
Important: If you use an integrated 401(k) provider — like Gusto 401(k) powered by Guideline, Human Interest, Betterment, Vestwell, or Empower — reach out to them before or right after starting a reversal so they can walk you through what to expect.
Partial reversals
If you reverse payroll for one team member, you cannot reverse others from the same payroll later without Gusto's help.
Closed quarter reversals
If you reverse a payroll from a closed quarter, we’ll automatically create and file amended returns — as long as Gusto filed the originals. Learn more about amended returns.
Compliance
Check your state’s overpayment laws before reversing payroll. Premium customers or customers with an HR resource add-on can submit a ticket to Mineral HR experts. Otherwise, visit your state labor website for guidance.
Accounting integrations
If you use an accounting integration, you may need to manually reconcile reversed entries after the reversal is complete.
You can cancel a payroll if Gusto has not yet debited your bank account. The debit occurs at 4 pm PT on the debit date — not when you submit. If you submitted early, you may still be able to cancel. If you cancel by mistake, you will need to resubmit.
Note: Canceled payrolls do not appear in View pay history. If it is a regular payroll, we save your data so you do not need to re-enter details — go to Pay, then Run payroll to resubmit.
To cancel an unprocessed payroll:
Sign in to Gusto and go to Pay.
In the top-right corner, click View pay history.
Find the payroll by check date. If a red Cancel button appears, the payroll can still be canceled.
Click Cancel this payroll and confirm.
Note: You can also cancel by clicking the check date, then choosing Cancel this payroll under Need to cancel?
If your payroll has been debited and processed, in most cases you can change or reverse it. Read the What to know before you reverse and Handle common payroll mistakes sections before starting a reversal.
To change a processed payroll:
Sign in to Gusto and go to Pay.
In the top-right corner, click View pay history.
Click the check date of the payroll you need to change.
In the gray box on the right side, click Make changes to payroll.
Follow the prompts to tell us what you need to change.
If you do not see Make changes to payroll, contact Gusto support.
To reverse payroll for one team member:
Sign in to Gusto and go to People.
Click the team member's name.
Select Pay.
Under Recent paystubs, click Actions (⋮) next to the payroll you want to reverse.
Click Make changes.
Under Changes to payroll, click Make changes to payroll.
Follow the prompts to tell us what you need to change.
If you do not see this option, go to Pay, click View pay history, select the payroll, and click Contact us.
After you submit a reversal, here’s what to expect:
Confirmation email — Gusto sends a confirmation to your admin email. Save this for your records.
Net pay reversal attempt — Gusto submits an ACH return request to the team member’s bank. This takes 1–2 business days.
Funds returned to your account — If we're able to pull back the net pay, it will be returned to your account within 5–7 business days of the reversal date. Tax timing follows the table above.
If the net pay reversal fails — Gusto will notify you by email. You’ll need to work directly with the team member to recover funds. This can be done outside or by setting up a post-tax deduction for future payroll. Gusto cannot force a bank to return a deposited amount, and we only attempt to pull funds once.
After funds are returned — Run a corrected off-cycle payroll if the team member is still owed pay for the period.
Note: A negative payroll entry appears in your reports immediately after reversal submission. This is expected — it keeps the team member’s year-to-date wage base accurate.
Contractor payments cannot be reversed. To change or cancel a US or non-US contractor payment, expand the sections below.
What you can do depends on the status of the payment:
Payment status
What you can do
Not yet processed
Cancel only. To make changes, cancel and rerun the payment.
Processed, not yet deposited
Cancel or change the payment.
Already received by contractor
Work directly with the contractor to recover funds. We cannot reverse contractor payments. If you recover funds, we'll update the reporting in Gusto.
Canceled payments are typically returned to your account within a few business days.
To change or cancel a US contractor payment:
Sign in to Gusto and go to Pay.
In the top-right corner, click View pay history.
Click US contractors.
Find the payment. If it shows This payment can still be adjusted, you can make changes without contacting us.
Click the payment, then under Adjustments click Make an adjustment.
Select what you need to change:
A contractor was paid more than once
You need to reverse the payment
A contractor was overpaid or underpaid
The wrong bank account number was entered
The wrong payment method was used (direct deposit vs. check)
Something else — select this option and click Contact us so we can help
Follow the remaining steps.
To cancel automated contractor payments:
Go to Pay.
On the right, click Pay a US contractor.
Click Automated payments.
Under the Active column, use the toggle to turn a schedule off.
Click the Actions menu (three dots) to delete the automated payment — after deletion, no new payments will be created.
Payments to non-US contractors must be canceled before 4 pm PT on the debit date. After that point, the payment cannot be canceled or stopped due to international banking rules.
To cancel an upcoming payment to a non-US contractor:
Sign in to Gusto and go to Pay.
In the top-right corner, click View pay history.
Click Non-US contractors.
Click the payday.
If cancellation is still available, click Cancel payment, then confirm.
If the payment has already processed and the contractor did not receive it by the end of the check date, contact Gusto support. We may attempt to recall the funds, but this is not guaranteed.