I've been through a very similar situation with my state university adjunct position, and I want to emphasize something that hasn't been mentioned enough here - you have more negotiating power than you might think! When I received my overpayment demand letter, I initially felt like I had to comply immediately. But after doing some research, I learned that most universities have formal appeal processes for payroll disputes. I submitted a written appeal arguing that since their error went undetected for over a year, they should absorb the tax burden rather than forcing me to float that money until tax season. While they didn't agree to absorb the full tax portion, they did agree to a 6-month payment plan with no interest, and they provided detailed documentation upfront that made claiming the tax credit much smoother. They also agreed to send the documentation directly to my CPA, which helped validate that this was a legitimate wage overpayment correction. The key was approaching it as a reasonable request for accommodation due to their error, rather than accepting their initial demand as non-negotiable. Most university finance departments have dealt with these situations before and understand the tax complications they create for employees. Don't be afraid to advocate for a solution that doesn't put such a financial burden on you for their mistake!

I'm really sorry you're dealing with this - overpayment situations are incredibly frustrating, especially when you're stuck paying back money you never actually received! From what I understand, you do unfortunately owe the university the full gross amount (including the tax portion), but you're not just out that money forever. When you file your 2024 taxes, you'll be able to claim the withheld taxes back through what's called a "claim of right" deduction or credit. A few key things to focus on: **Get proper documentation first** - Before you pay anything, make sure the university provides written confirmation of the overpayment amount, a breakdown of what was withheld for taxes, and acknowledgment that this was reported on your 2023 W-2. This documentation is crucial for your tax filing. **Consider the timing** - Since you'll be repaying in 2024 but the overpayment was in 2023, you might want to strategically time when you make the repayment. If you can delay until January 2025, you could potentially handle everything on your 2025 tax return instead of waiting to file 2024 taxes to recover the money. **Don't rush the payment** - This was their payroll error that went undetected for a year. Taking a few weeks to get proper documentation and understand your options is completely reasonable. Many universities also have internal policies for overpayment situations that might give you more flexibility than their initial demand suggests. You might also want to check if they have a formal appeal process - some people have had success negotiating payment plans or better terms by approaching it as requesting accommodation for the financial burden created by their error. Hang in there - this is definitely solvable even though it's a major headache right now!

I work in payroll and see this confusion all the time. Stock options and RSUs trigger mandatory supplemental income withholding rules. The 45% you're seeing is actually the correct combined withholding when you add up ALL the different taxes: Federal supplemental rate (22%) + State supplemental rate (varies, but often 9-13% for higher income states) + FICA (7.65%) + Additional Medicare Tax if applicable (0.9%) + Local taxes where applicable + Any mandatory retirement withholding your company might have. Many employees think they're being overtaxed, but this is actually protecting you from owing a large sum when you file your return. The alternative would be underwithholding, leading to a surprise tax bill plus possible penalties.

This is definitely frustrating, but unfortunately that withholding rate is pretty standard for stock compensation. I went through the same shock when I exercised my options last year. The key thing to understand is that stock options are treated as "supplemental income" which has different withholding rules than your regular salary. Even though you're normally taxed at 24%, supplemental income gets hit with: - 22% federal supplemental rate (flat rate regardless of your normal bracket) - 6.2% Social Security tax - 1.45% Medicare tax - Your state income tax rate (which can be substantial) - Possibly local taxes depending on where you live When you add all those up, 45% total withholding is actually pretty typical, especially if you're in a state with higher income taxes. The silver lining is that this is just withholding - not your actual tax liability. When you file your return next year, you'll calculate what you actually owe based on your total income for the year. If they over-withheld (which they probably did), you'll get the excess back as a refund. I'd recommend getting a detailed breakdown from your payroll department so you can see exactly where that 45% went. It should all add up to legitimate tax withholdings.

This is really helpful information! I'm in a similar situation as a freelance consultant. One thing I'd add is that if you're doing a lot of business travel with tolls, consider getting a dedicated business checking account and linking your E-ZPass to that account for automatic replenishment. This creates a clear paper trail that separates business toll expenses from personal ones right from the start. I also keep a simple spreadsheet where I log each business trip with the date, destination, purpose, and estimated toll cost. At the end of the month, I reconcile this against my E-ZPass statement. It takes maybe 15 minutes a month but makes tax prep so much smoother. The IRS loves clear documentation, and having everything organized upfront saves tons of stress later!

One thing I'd recommend is setting up a separate business toll account if your provider allows it. I have two E-ZPass accounts - one for personal use and one strictly for business travel. This eliminates the need to sort through mixed statements at tax time. The business account automatically deducts from my business checking account, creating a clean paper trail. For those using apps like MileIQ, most of them have a notes feature where you can quickly record toll amounts for each business trip. This creates a single record with both mileage and toll data. I also take photos of any cash toll receipts with my phone immediately - they fade over time and become unreadable. Remember that parking fees at client locations are also deductible separately from the standard mileage rate, just like tolls. I keep a small envelope in my car specifically for parking receipts since those are easy to lose track of.

As a newcomer to the US tax system, I want to share what I learned after going through this exact situation last year. The IRS banking update process is indeed confusing, but here's what worked for me: 1. **Timing is absolutely everything** - I filed my return on a Friday evening and realized Saturday morning that I'd used my old Canadian bank routing number by mistake. I called the Refund Inquiry Unit (866-829-1954) first thing Monday morning and they were able to update it because my return was still in "accepted" status, not "processing." 2. **Have your documentation ready** - They asked for my SSN, filing status, exact refund amount from my return, and previous year's AGI. They also wanted me to confirm the last four digits of the OLD account number I had mistakenly used. 3. **The agent explained the "24-48 hour rule"** - Once your return moves from "accepted" to "processing" status (which you can check on Where's My Refund), banking changes become impossible due to security protocols. What surprised me most was how helpful the agent was once I got through. She even gave me a confirmation number and advised me to check Where's My Refund in 2-3 days to verify the update went through. My refund hit the correct account exactly 10 days later. For anyone in this situation: don't panic, but do act fast. The system may seem outdated, but there are people there who can help if you catch it in time.

As someone who just went through this process myself, I can relate to your frustration about the lack of clear information on the IRS website. Here's what I discovered after hours of research and calling: The key thing to understand is that the IRS treats banking information changes very differently depending on where your return is in the processing pipeline. If you haven't filed yet, you're in great shape - just include the correct banking info on your return. But if you've already filed, your window of opportunity is incredibly narrow. What worked for me was checking the "Where's My Refund" tool immediately after I realized my mistake. If your return still shows "Return Received" rather than "Refund Approved," you might still have a chance. I called the Refund Inquiry Unit at 866-829-1954 (much better than the main IRS line) within 36 hours of e-filing and they were able to update my banking information. Regarding your concern about money going to an inactive account - don't worry, you won't lose it. The bank will reject the deposit and send it back to the IRS, who will then mail you a paper check to your address on file. It just adds 4-6 weeks to the process. Since you're new to the US, make sure your current address is properly updated with the IRS in case you do end up getting a paper check. The last thing you want is a refund check going to an old address!

Thanks everyone for the detailed explanations! This thread has been incredibly helpful. I just want to confirm my understanding based on what @Layla Sanders outlined - so for my situation, I should report $460,000 ($475,000 - $15,000 credits) as my gross proceeds on Schedule D line 1d, then subtract my basis of $350,000 ($310,000 purchase + $40,000 improvements) plus any other selling expenses like realtor commission? Also, since this was my primary residence for the entire time I owned it (2016-2024), I should qualify for the $250,000 exclusion as a single filer. With a gain of around $110,000 before other selling expenses, it looks like I won't owe any capital gains tax on this sale. Does that sound right? One more question - should I still report this sale on my tax return even if the entire gain is excluded, or can I skip Schedule D altogether?

Just wanted to add a practical tip for anyone in a similar situation - when you're preparing your tax return, double-check that your closing statement clearly separates the buyer credits from other closing costs. I sold my home last year and initially got confused because my settlement statement showed the credits in two different places - some as a reduction to my net proceeds and others listed with the buyer's closing costs. My tax preparer explained that what matters for your taxes is the bottom line: how much money you actually walked away with after all credits and fees. Also, keep in mind that if you used any of those buyer credits to pay for repairs or improvements that you completed before closing, you might be able to add those amounts to your cost basis instead of treating them as a reduction in sales price. This could potentially save you some money if your gain is close to the exclusion limit. Worth discussing with a tax professional if the numbers are tight!