Payroll Pre-Tax Deduction Refund

Question

The current Paycheck wizard will not allow the entry of a negative amount for a pre-tax deduction.  The deduction was originally taken in error after withdrawing from the plan and now there appears to be no way to recognize the credit that is recovered.  At this time the W2-Gross amount reported is incorrect.  How can this be corrected?

Tom Young · Answer

I'd think one way of approaching this would be to edit the transaction, delete the negative deduction, and then increase the Salary amount accordingly.

NotACPA · Answer

Enter it in the Earnings section, as Income.Since it was a pre-tax deduction originally, the refund is almost certainly taxable.I had to do this with my wife's paycheck earlier this year.