If recently my husband’s company overpaid him and we are making repayment, should we also be responsible for the additional taxes of the original overpayment?

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If recently my husband’s company overpaid him and we are making repayment, should we also be responsible for the additional taxes of the original overpayment?

His check should have been $1347.67 and instead was paid $2588.26. On a similar check as to what he should have been paid, his taxes were $127.70 and on the overpayment check, taxes were $431.75. Here’s where we are unsure. We had no problem paying back out of the next 2 checks but they actually took more than they should have off the checks and now they said they will pay us back, but they told us that we are responsible for all of that extra tax money as well. We can’t figure out how we have to pay them for taxes on money that we never got because we paid it back and the taxes obviously never went to us as they are taxes.

Asked on January 5, 2016 under Employment Labor Law, Nebraska

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

No, you are not responsible for the extra tax money if you repay the overpayment because, as you you correctly indicate, you were not paid the money in essence--ergo, you don't owe taxes on it. You only owe taxes on income actually received, not on mistakes you corrected, and the company needs to make you whole so that you do not come out behind--you should net out to exactly where you would have been had you been paid the correct amount in the first place.


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