If my employer has overpaid me for 9 months this year and now it’s is asking for me to repay the overpayment, what am I legally obligated to do?

A small portion came as take home pay, however the bulk of the pay went directly to taxes. I have no issue with repaying the take home, however repayment of money that went directly to taxes is confusing me.

Asked on August 31, 2015 under Employment Labor Law, Oregon

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

The money may "go directly to taxes," but it is still money paid to you. If you are in, say, a 35% tax backet and are doing enhanced withholding, so that, say, 60% of your money goes to taxes, the employer is still paying you, for example, $100, even if $60 of it is is paid to taxes. There is no legal difference, in this example, between the company giving you $100 and you depositing it and then later paying $60 to taxes, and the company sending $60 for you or on your behalf to the IRS and direct depositing the other $40 into you bank account. In both cases, the gross, or total, amount paid to or for you is the same $100. And therefore, if you were not entilted to that money, you have to pay the entire gross amount, including the portion sent to the tax authorities.


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