Employee refund overpayment

DebonAir
DebonAir Member Posts: 392
edited September 2019 in Reckon Accounts (Desktop)
An employee was overpaid and has since left the company.  He was paid 20 hours and only worked 10  before he quit. He has now returned $120 cash to me. How do I enter this refund.

Comments

  • Rav
    Rav Administrator, Reckon Staff Posts: 15,305 Community Manager Community Manager
    edited February 2017
    Hi Debbie,

    I've found a KB article here which may help -
    http://kb.reckon.com.au/issue_view.asp?ID=4195

    Let me know,

    Cheers
    Rav


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  • DebonAir
    DebonAir Member Posts: 392
    edited May 2017
    Hi, thanks but this is not helping much. The guy left the company last year in October. He has now come back to pay the money back.  I cant find how to do reverse wages and receive the cash. I have done journals but they are not linking to his payroll records and not showing on the payment summary.
  • Suzanne Lockwood
    Suzanne Lockwood Accredited Partner Posts: 71 Accredited Partner Accredited Partner
    edited September 2019
    Hi Debbie,

    I had to assist a client this week with the same issue; this is how we tackled it:

    1.      Record a Deposit into your bank account for the overpaid wages allocating the amount to a Payroll Clearing Account.  Setup a new Bank type account if this account does not already exist in your Chart of Accounts.

    2.      Create a new Hourly Wage payroll item:

    (a)      Name:  Gross Wages Overpaid Recovered.

    (b)      Expense Account:  Select your usual wages account.

    (c)      Tax tracking type:  Gross Payments [to reduce the Gross payments reported on the Payment Summary].

    (d)      Taxes:  Tick PAYG Tax and State Payroll Tax [to reduce the Total Tax Withheld amount on the Payment Summary and Payroll Tax reporting (if applicable].

    (e)      Inclusions:  Tick the relevant Super items if the reversal is within the unreported quarter [to reduce the amount of super expense and liability].

    3.      Create a new Addition payroll item:

    (a)      Name:  Net Wages Overpaid Recovered.

    (b)      Expense Account:  Payroll Clearing Account [to offset the net wages amount allocated to this account by the Deposit in Step 1 above and clear out the account].

    (c)      Tax tracking type:  None [as this is taken care of in Step 1(c) above].

    (d)      Taxes:  Untick all [as this is taken care of in Step 1(d) above].

    (e)      Calculate based on quantity:  Neither.

    (f)       Default rate and limit:  Leave blank.

    (g)     Inclusions:  Untick all [as this is taken care of in Step 1(e) above.

    4.      Create another new Addition payroll item:

    (a)      Name:  Wages Overpaid PAYG Reversal.

    (b)      Expense Account:  Your usual PAYG Withholding Liability Account [to reduce the balance in this account].

    (c)      Tax tracking type:  None.

    (d)      Taxes:  Untick all.

    (e)      Calculate based on quantity:  Neither.

    (f)       Default rate and limit:  Leave blank.

    (g)     Inclusions:  Untick all.

    5.      Record the wage reversal using the Payroll Clearing Account:

    (a)      Use the Gross Wages Overpaid Reversal item in the Earnings section with a negative hours quantity.

    (b)      Use the Net Wages Overpaid Reversal item in the Other Payroll Items section for the net wage refunded.

    (c)      Use the Wages Overpaid PAYG Reversal item in the Other Payroll Items section for the tax withheld amount.

    (d)      Confirm the cheque amount is zero and complete the processing.

    6.      Record the Liability Adjustment:

    (a)      Date:  Date of refund.

    (b)      Effective Date:  Date of refund.

    (c)      Adjustment is for:  Employee – select from dropdown list.

    (d)      Accounts Affected:  Do not affect accounts [this is only to correct the Payment Summary].

    (e)      Select the PAYG Tax payroll item in the Taxes and Liabilities section using a negative amount with an appropriate memo [reduce the amount in the Total Tax Withheld on the Payment Summary].

    7.      Verify:

    (a)      The PAYG Withholding liability account has been reduced by the amount of the tax.

    (b)      The Payroll Clearing account has a debit and credit entry for the amount of the net wage.

    (c)      The Wages accounts shows a negative entry for the amount of the gross wage.

    (d)      The Payment Summary agrees with the Payroll Summary report for the Employee.

    Hopefully this is of some help.

    Regards,
    Suzanne
  • DebonAir
    DebonAir Member Posts: 392
    edited December 2016
    Thank you for this info. I will set all of this up and use it next time (if there is one)
    I have had to find a solution quickly as it was EOFY. 
    I went back into his last (and overpaid) paycheque and corrected it to what it should have been. This resulted in a balance owing in the clearing account for which I received as cash deposit. 

    I really appreciate your assistance with this and will definitely set it up in our books for future use.
  • DebonAir
    DebonAir Member Posts: 392
    edited December 2016
    .

  • Tracey Dix
    Tracey Dix Member Posts: 2
    edited September 2016
    Hi Suzanne,

    This information has come in handy for the company I work for - however, I have a question regarding the last step in the Verify process.

    I have checked the reports mentioned in steps 7(a), (b) & (c) & all is fine, my question is with step (d) - When you say Payment Summary do you mean the actual PAYG summary that prints from the Employees drop down menu & can this be printed at anytime of the year? I am a little hesitant to run this step in case I muck something else up & if I cannot run step (d) how can I verify the details in the Payroll Summary Report?

    Your assistance with this is greatly appreciated.

    Tracey
  • Suzanne Lockwood
    Suzanne Lockwood Accredited Partner Posts: 71 Accredited Partner Accredited Partner
    edited December 2016
    Hi Tracey,
    You are right, I do mean the PAYG Payment Summary and it is safe to run it at any point during the year without causing a problem.
    Cheers, Suzanne
  • Abbie Huxley
    Abbie Huxley Member Posts: 15
    edited February 2017
    Hi Suzanne,

    I find myself in the same situation however the over payment in our payroll was for reimbursements, not wages.  A one-off reimbursement ended up as a weekly reimbursement in an employee's payroll file and hence he was "reimbursed" for several weeks before the error was picked up.  He has since left the company but is making weekly repayments to pay back the money.  As a reimbursement does not affect tax or super I am just looking for a simplified version of above.  Are you able to help?
    Thanks, Abbie
  • Suzanne Lockwood
    Suzanne Lockwood Accredited Partner Posts: 71 Accredited Partner Accredited Partner
    edited March 2017
    Hi Abbie,
    Apologies for this very tardy response but only just recovering from a rather busy few months.  This is probably too late now but thought I would post anyway.
    Without knowing how you manage reimbursements in your accounts and what your setup is in payroll and how it is linked to the accounts, it is a bit hard to say exactly.  However, if you are using an Addition, then a Deduction linked to the same account acting as a reversal might work for you?
    Happy to help further if you still need to resolve this.
    Regards, Suzanne