Monday, September 10, 2018

Refund Over Deduction on Garnishment to an Employee

Over deduction of garnishment in paychecks may be a result of employee missing to inform the employer of an out of pocket payment. In this event, payroll users may:

1. Adjust the payroll liabilities they are to pay for the Garnishment and/or

2. Refund the employee for the Garnishment he manually paid but was still taken from his paycheck.

Available options are:
Option 1 - If user has already issued the liability check to the Garnishment agency:
1. User has the option to wait for the Garnishment agency to refund the overpayment to them (or to the employee directly) since their liability check would reflect as double-payment for the manually-paid amount of the employee.
2. If employee requires them to refund the amount, they can opt to write a manual check to their employee then just associate the agency refund as a receivable for their company.

Option 2 - If user has not yet issued the liability check to the Garnishment agency:
1. If user has processed the liability check in NetSuite, void the check (Deleting the liability check would not return the amount due on the Pay Payroll Liabilities screen).
2. Create a payroll adjustment with negative amount paid by the employee for the Garnishment using a temporary adjustment account (i.e. expense account). The adjustment would be a debit to the Garnishment liability account and a credit to the selected adjustment account. Also, this adjustment should show the adjustment amount as an Un-Applied Payment to the Garnishment agency via Pay Payroll Liabilities screen.
3. Via Pay Payroll Liabilities screen, apply the adjustment amount to the amount due to the Garnishment agency (may be done together with other Garnishment payment).
4. Write a check (Transactions>Bank>Write Checks) to the employee selecting the adjustment amount as the account from where the money is going to be debited. GL Impact of this transaction will be a debit adjustment account and credit to company's cash/bank account.

Notes: Garnishment is an after-tax deduction being the reason for the adjustment to be free from taxable/taxed wage base worries.
Applicable to either Premier Payroll or Enhanced Premier Payroll users as Garnishment is a third-party liability (not covered by Ceridian funding).  


Disclaimer: To ensure compliance with requirements imposed by the tax agency, NetSuite informs you that any U.S. government tax advice contained in this article, unless otherwise specifically stated, was not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any matters addressed herein.
These materials do not constitute tax, legal, or accounting advice and neither NetSuite, nor its agents, employees, or representatives are in the business of offering such advice. Please consult your tax, legal, and accounting advisors for tax, legal, or accounting advice. 

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