repay of overpayment - W-2 discussion

[daallstar]

What is the name of your state?NC

I recently was involved in an overpayment issue. I was overpayed and now I am in the process of repaying the company, my only condition is that the company agree to adjusting my W-2 forms. Evertime I ask them to confirm that my w-2 will be adjusted, I don't hear back from them for a few days. Otherwise they're on my back to pay them back.

Is the company legally bound to adjust my W-2s when i pay them back?

Since i don't work for them anymore, If they avoid the situation until next year, and my W-2s are not adjusted, will i have to pay taxes on the money I recieved accidentally and then have to pay the money back also? This would be a double wammy for me.

thanks for your help.

 

[pattytx]

The answer depends on whether you are repaying the gross or net overpayment and how much (if not all) of the overpayment you will repay in the year in which the overpayment occurred.

To the extent that the overpayment is repaid in the same year, the employer must reduce the income and the applicable taxes and not show them on the W-2, as though the overpayment never occurred.

If any of the overpayment is repaid in a subsequent year, the amount repaid must be included on the employee's W-2 for that year, but the employee may be able to take a deduction on his 1040 (you may have to itemize deductions to do that, I'm not sure). In this case, it is strongly recommend that the employer require repayment of the gross amount, not the net.

As you can see, it would be to your advantage to repay this in the current year. I would not wait for the company to "acknowledge" that your W-2 will be adjusted. If you pay it all back (the net pay) this year, and they do not adjust your W-2 accordingly, then you can demand a correct one, and if they do not provide it, you can attach a statement (with all the pertinent details) attesting to that fact to your 1040.

Hurry, hurry, time is running out.

 

[daallstar]

Just to clairfy,

If I repay the total net amount this year. Then, they must readjust my w-2s accordingly.

If I repay part of the amount this year and the other part next year, then they must fix my w-2 for the amount i've paid this year? and i have to write off the rest the following year?

for example, if i owe net of $1000, and i repay $400 this year, then they should adjust my w-2 by the gross amount that net $400 resembles, and when i repay the other $600 the next year, then I will have to use itemized deduction to reduce my gross income? but you're saying that if i wait until next year they may ask for more than $600 since that is just the net and not the gross.. but can they ask me for the gross eventhough i never received the gross?

Thanks in advance

 

[pattytx]

That is correct. In fact, the IRS strongly recommends that the gross overpayment be repaid if repayment is in a subsequent year because of the tax treatment.