How do you process a refund of pretax deduction?

Yes, you can set up a new earnings category in your QuickBooks Online (QBO) Payroll account, AnnetteL. I'll share the steps on how to achieve that below.

Since the pretax deduction for a car has been stopped and the refund has been processed to the company for return as pretax earnings, we can create a pay category and name it "Car Refund."

Here's how:

1. Go to the Payroll menu and click Payroll Settings.
2. Select Pay Categories under Pay Run Settings.
3. Press the Add button name it as Car Refund and Save it afterwards.
   
   

After adding a Pay category, return to the Employees Center and select the specific employee. Follow these steps to assign the newly created pay category to that employee.

1. Click on the Pay Run Inclusions menu, and hit on the Add button on the Additional earnings category.
2. Choose the Car Refund in the Pay category.
   
   
   
   
3. Select your specific location.
4. Set the Earnings per pay run and Rate per hour according to the refund amount.
5. You can add notes that will appear for the earnings line in every pay run.
6. Choose the All pay runs until the maximum amount has been reached under the This earnings line should be included in field.
   
   

You can then run the payroll for that specific employee, and check the additional earnings you have set for them by that payee to see the details which can be seen under the Earnings category. Once done checking you can then click on Finalise Pay Run.

You can create a pay event after finalizing a pay run. It is recommended that you submit the pay event on or before the employee's pay date. Before creating a paid event, you must first enable Single Touch Payroll (STP).

If you have any additional questions or inquiries about managing your employee's payroll in QuickBooks. You can visit this thread and circle back by clicking the Reply button below, and we will gladly assist you.