If you accidentally overpaid an employee and it’s too late to initiate a reversal, you may be able to correct the error by simply reducing (deducting) the employee’s gross wages on future payrolls.
In some cases, you may need to get money back for a non-taxable expense or reimbursement paid to an employee—to do so, set up a post-tax deduction for the employee on their next payroll.
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On the first page of a payroll run, you can manually adjust an employee's gross wages to adjust for any previously overpaid wages.
Before you consider reducing wages on future payrolls, the amount you want to deduct must be a result of an accidental overpayment (e.g. a mathematical or clerical error), and there can’t be any dispute over whether the employee is actually owed those wages.
To reduce gross wages during the payroll run:
As with many laws affecting employees, if the state law is more restrictive than the federal law, the employer must follow the law that protects the employee’s rights.
Considerations to make before deducting overpaid wages from subsequent paychecks: