In the event of an overpayment by a homeowner that you'd like to refund take the following steps:

1) Make note of the revenue account that the homeowner's payment was categorized to. You'll need to code the refund to this same revenue account to maintain the accuracy of your books.

2) Generate an invoice for the amount you plan to refund. You can title the invoice "Refund for Overpayment" or something similar. When you create that invoice you'll categorize it to the same category that the deposit was categorized to. Go ahead and set the active and due dates for the current date, so that it immediately affects their balance. You can also turn off "Email Invoice on Active Date" so that the homeowner doesn't get an email notification. This invoice is the only way to absorb the overpayment to the homeowner's account.

If you need further guidance on how to generate an invoice check out this article.

3) Write the homeowner a check for their refund.

4) Create a Journal Entry that reduces your revenue category with a debit and reduces your bank account with a credit.

If your bank account is linked:

Once that refund check has pulled through to your transactions you can delete that transaction, since you've already recognized the appropriate reductions through your journal entry.