If an employee is overpaid on a paycheck, and that check has had all state and federal taxes removed, is the employer allowed to request those taxes back as part of their reimbursement?
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If an employee is overpaid on a paycheck, and that check has had all state and federal taxes removed, is the employer allowed to request those taxes back as part of their reimbursement?
Union call for a possible one time employer.
W2 was filed by employer and taxes were paid
by the employer on the employees behalf.
Requested amount by employer has state taxes
removed but federal taxes added to the final
amount.
Asked on November 20, 2017 under Employment Labor Law, Illinois
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
Yes, they can. Taxes paid for you is still money paid to you, since otherwise, you'd have had to pay those taxes yourself--and if you do not return the taxes but return the rest of the money, you will get an improper "windfall" at tax time, since those amounts of tax payments would then be applied against your other taxes due, reducing the amount you'd have to personally pay and saving you money. When there is an overpayment, you must return the *gross* amount, not the net: you have to return all payments (including taxes) made on your behalf.
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