The first thing to know is you shouldn't wet sand the dried paint. It's a waterborne paint and wet sanding will remove it almost immediately.
Note: it is usually best to remove excess paint from the edge of your scratch while it is wet. Just use one of our dabbers, a q-tip, or some small bit of soft cloth to dab it away. 
If the paint has dried and you just want to remove the paint at the edges of the repair where the paint extends beyond the scratch, you need to do this very carefully.
There are a couple ways you can try to remove the paint outside the scratch more precisely:
1. One technique that will give you more precise control over removing excess paint is to use one of our micro dabbers. First try just water on the dabber. The paint is waterborne and usually a little pressure on the dabber with water will remove the excess. This method allows you to see the paint you are removing as you do it. If water isn't effective, you can put some of the polish compound on the dabber and carefully rub the paint at the edge of the scratch and it will come off. Wipe away excess polish frequently so you can see your progress.
2. Another technique is to use the polish cloth, or some synthetic eyeglass cleaning cloth (which is thinner). Wrap it around the eraser end of a pencil, and dab that in some water or polish compound because it will give you a soft, pliable rubbing tip to carefully polish away the overpaint. 
Note that if you attempt to polish or wipe the new bare paint, either with water, alcohol or polish compound, the paint will almost certainly be removed. This is normal, as paint alone is fragile until it is clear coated.
It's important to apply the paint in thin coats so that it flows to a level finish better, and dries more uniformly. If your paint finish is uneven due to the underlying substrate being uneven, or the paint was applied unevenly, we recommend carefully dry sanding the damaged area to make it smooth and level. Next, reapply the paint in 2-3 thin coats. Then, apply clear coat (without trying to sand or polish the bare paint before clear coating).