Fixing Employee Deduction Errors

What do I do if I deduct the wrong amount from an employee?

If you accidentally deduct the wrong amount for FICA or other employee deductions, you will need to correct the error by adjusting future pay periods. You can do that in one period or several, depending on the size of the error.

In this US, this case applies to the employee portion of Social Security and Medicare, employee contributions to unemployment insurance (just a few states), and other deductions such as union dues.

NOTE-- Click one of the links here, if you made an error in employee tax witholding or an employer tax. Those types of payroll items are easier to fix!

To correct an incorrect deduction in a past pay period, follow these steps:

  1. Decide on how quickly you want to correct the error, by adjusting withholding in future payroll.
  2. It may be good to talk with the employee, and work out a plan.
  3. Choose Preferences from the Options menu, and choose Expenses from the submenu.
  4. Turn on the checkbox for Allow Payroll Deduction Changes.
  5. Click OK.
  6. When you write payroll each week, double-click in the Deduct column for that employee.
  7. Add to the calculated amount if you under-withheld, or reduce it if you over-withheld.
  8. Click OK.
  9. Repeat steps 6 to 8 for each period, until you have sufficiently corrected the error.

NOTE-- Errors in employee deductions are the hardest to fix, since you need to adjust the amount you pay the employee, and get it exact so it matches the amount you pay the tax agency. You may want to write down the adjustment plan, or set up a spreadsheet to track the adjustments.

Click here for more about payroll in the Getting Started manual.
Click here for more about payroll in the Reference manual.

Click here to return to payroll topics.
Click here for general information about Goldenseal payroll software.