diff --git a/app/Http/Controllers/PaymentController.php b/app/Http/Controllers/PaymentController.php
index e0ab42bdc038..b612c6388aa5 100644
--- a/app/Http/Controllers/PaymentController.php
+++ b/app/Http/Controllers/PaymentController.php
@@ -683,8 +683,6 @@ class PaymentController extends BaseController
     {
         $payment = $request->payment();
 
-// nlog($request->all());
-
         $payment = $payment->refund($request->all());
 
         return $this->itemResponse($payment);
diff --git a/app/Http/ValidationRules/PaymentAppliedValidAmount.php b/app/Http/ValidationRules/PaymentAppliedValidAmount.php
index e3a6e3c7dfa5..292712a1d738 100644
--- a/app/Http/ValidationRules/PaymentAppliedValidAmount.php
+++ b/app/Http/ValidationRules/PaymentAppliedValidAmount.php
@@ -51,7 +51,7 @@ class PaymentAppliedValidAmount implements Rule
         $payment_amounts = 0;
         $invoice_amounts = 0;
 
-        $payment_amounts = $payment->amount - $payment->applied;
+        $payment_amounts = $payment->amount - $payment->refunded - $payment->applied;
 
         if (request()->input('credits') && is_array(request()->input('credits'))) {
             foreach (request()->input('credits') as $credit) {
diff --git a/app/Services/Payment/DeletePayment.php b/app/Services/Payment/DeletePayment.php
index 9e531e19b371..626327f803a7 100644
--- a/app/Services/Payment/DeletePayment.php
+++ b/app/Services/Payment/DeletePayment.php
@@ -122,6 +122,8 @@ class DeletePayment
         }
         else {
 
+            /* If there are no invoices - then we need to still adjust the total client->paid_to_date amount*/
+
             $this->payment
             ->client
             ->service()
diff --git a/app/Services/Payment/RefundPayment.php b/app/Services/Payment/RefundPayment.php
index 2b44eae951e8..0dfa6fa355eb 100644
--- a/app/Services/Payment/RefundPayment.php
+++ b/app/Services/Payment/RefundPayment.php
@@ -267,9 +267,17 @@ class RefundPayment
             // $this->credit_note->ledger()->updateCreditBalance($adjustment_amount, $ledger_string);
 
             $client = $this->payment->client->fresh();
-            //$client->service()->updatePaidToDate(-1 * $this->total_refund)->save();
+            
             $client->service()->updatePaidToDate(-1 * $refunded_invoice['amount'])->save();
         }
+        else{
+            //if we are refunding and no payments have been tagged, then we need to decrement the client->paid_to_date by the total refund amount.
+            
+            $client = $this->payment->client->fresh();
+            
+            $client->service()->updatePaidToDate(-1 * $this->total_refund)->save();
+
+        }
 
         return $this;
     }
diff --git a/tests/Feature/Payments/UnappliedPaymentDeleteTest.php b/tests/Feature/Payments/UnappliedPaymentDeleteTest.php
index 91794770cd63..bc93dcfa51d5 100644
--- a/tests/Feature/Payments/UnappliedPaymentDeleteTest.php
+++ b/tests/Feature/Payments/UnappliedPaymentDeleteTest.php
@@ -48,7 +48,6 @@ class UnappliedPaymentDeleteTest extends TestCase
    public function testUnappliedPaymentDelete()
    {
 
-
         $data = [
             'amount' => 1000,
             'client_id' => $this->client->hashed_id,
@@ -74,9 +73,12 @@ class UnappliedPaymentDeleteTest extends TestCase
             $arr = $response->json();
             $response->assertStatus(200);
             
-            $this->assertEquals(0, $this->client->paid_to_date);
         
             $payment_id = $arr['data']['id'];
+            $payment = Payment::with('client')->find($this->decodePrimaryKey($payment_id));
+
+            $this->assertEquals(1000, $payment->amount);
+            $this->assertEquals(1000, $payment->client->paid_to_date);
 
             try {
                 $response = $this->withHeaders([
diff --git a/tests/Feature/Payments/UnappliedPaymentRefundTest.php b/tests/Feature/Payments/UnappliedPaymentRefundTest.php
new file mode 100644
index 000000000000..bd4cceb96e5b
--- /dev/null
+++ b/tests/Feature/Payments/UnappliedPaymentRefundTest.php
@@ -0,0 +1,110 @@
+<?php
+/**
+ * Invoice Ninja (https://invoiceninja.com).
+ *
+ * @link https://github.com/invoiceninja/invoiceninja source repository
+ *
+ * @copyright Copyright (c) 2021. Invoice Ninja LLC (https://invoiceninja.com)
+ *
+ * @license https://opensource.org/licenses/AAL
+ */
+namespace Tests\Feature\Payments;
+
+
+use App\Models\Payment;
+use App\Utils\Traits\MakesHash;
+use Illuminate\Foundation\Testing\DatabaseTransactions;
+use Illuminate\Foundation\Testing\WithoutEvents;
+use Illuminate\Routing\Middleware\ThrottleRequests;
+use Illuminate\Validation\ValidationException;
+use Tests\MockAccountData;
+use Tests\MockUnitData;
+use Tests\TestCase;
+
+/**
+ * @test
+ */
+class UnappliedPaymentRefundTest extends TestCase
+{
+    use MakesHash;
+    use DatabaseTransactions;
+    use MockUnitData;
+    use WithoutEvents;
+
+    public function setUp() :void
+    {
+        parent::setUp();
+
+        $this->faker = \Faker\Factory::create();
+
+        $this->makeTestData();
+        $this->withoutExceptionHandling();
+
+        $this->withoutMiddleware(
+            ThrottleRequests::class
+        );
+    }
+
+   public function testUnappliedPaymentRefund()
+   {
+
+        $data = [
+            'amount' => 1000,
+            'client_id' => $this->client->hashed_id,
+            'invoices' => [
+            ],
+            'date' => '2020/12/12',
+
+        ];
+
+        $response = null;
+
+        try {
+            $response = $this->withHeaders([
+                'X-API-SECRET' => config('ninja.api_secret'),
+                'X-API-TOKEN' => $this->token,
+            ])->post('/api/v1/payments', $data);
+        } catch (ValidationException $e) {
+            $message = json_decode($e->validator->getMessageBag(), 1);
+            $this->assertNotNull($message);
+        }
+
+        if ($response){
+            $arr = $response->json();
+            $response->assertStatus(200);
+            
+            $this->assertEquals(1000, $this->client->fresh()->paid_to_date);
+
+            $payment_id = $arr['data']['id'];
+
+            $this->assertEquals(1000, $arr['data']['amount']);
+
+            $payment = Payment::whereId($this->decodePrimaryKey($payment_id))->first();
+
+            $data = [
+                'id' => $this->encodePrimaryKey($payment->id),
+                'amount' => 500,
+                'date' => '2020/12/12',
+            ];
+
+            try {
+                $response = $this->withHeaders([
+                    'X-API-SECRET' => config('ninja.api_secret'),
+                    'X-API-TOKEN' => $this->token,
+                ])->post('/api/v1/payments/refund', $data);
+            } catch (ValidationException $e) {
+                $message = json_decode($e->validator->getMessageBag(), 1);
+                $this->assertNotNull($message);
+            }
+
+            $response->assertStatus(200);
+
+            $this->assertEquals(500, $this->client->fresh()->paid_to_date);
+
+        }
+
+
+
+   }
+
+}
\ No newline at end of file