Employer Overpaid Me $48,000: What to Do When They Demand It Back

Payroll Error and Repayment Demands

• 💡 A caller received an accidental gross payment of $48,000 from her employer due to a payroll error.
• ⚠️ She informed her employer before the funds hit her account, but the delay in correction means she now faces a demand for repayment.
• 💰 After taxes, she received a net of approximately $28,000, with $3,300 being her actual paycheck and $23,000 in withheld taxes.

Tax Implications of Overpayment

• 📈 Because the error crossed tax years and wasn't corrected promptly, the employer is demanding the gross repayment of $48,000.
• 💸 This requires the caller to come up with an additional $23,000 out of pocket, as she has already been taxed on the overpaid amount in her 2024 tax return.
• ❓ She is unsure how to navigate repaying the gross amount when she has already paid taxes on it and only received the net amount.

Understanding the Actual Debt

• 🎯 The advice clarifies that the caller does not owe the full $48,000 gross amount.
• 🔑 The actual debt is the net amount received, plus any portion of her regular paycheck that was part of the overpayment.
• 🧾 The $23,000 in taxes withheld should be recoverable as a tax refund from the IRS, provided the employer files an amended W-2.

Recommended Actions

• 🤝 The caller should repay the net amount she received from the overpayment.
• 🔍 She needs to work with a tax professional or CPA to ensure the employer files an amended W-2 to correct the income reported to the IRS.
• 💰 Once the corrected W-2 is filed, she should receive the $23,000 tax refund from the IRS, which can then be used to repay the remaining portion of the overpayment.
• ⚠️ The employer's delay in correcting the error is highlighted as a point of frustration, and the advice suggests that in smaller overpayment situations, companies might absorb the cost.