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Deduction Refund for previous year payrolls

Deduction Refund for previous year payrolls


Description of Issue

An employee was withheld the incorrect health insurance deduction in a prior year, how do I handle a deduction refund for the first payroll of the new year?

Context
  • Enterprise ERP Payroll
  • Employee Deductions
  • Payroll Start and Status
  • Earnings and Deductions
Cause

Employee was withheld the incorrect deduction/amounts in prior year.

Resolution
  • Contact the IRS for a recommendation on how to handle the refunded deduction amount.
    • Example: Backdate refund and report in prior year with the difference or report in the new year and deal with the difference in the new year W-2.
  • Once the IRS has made their recommendation, use the below link for the Deduction Refund.
Additional Information