What recourse do I have for being taxed on an overpayment from my employer?

This is actually a common issue with wage overpayments! Here's how it works: When an employer overpays you, they have the right to request the full gross amount back, even though you only received the net amount after taxes. This is because the overpayment was never actually your income, so the entire transaction needs to be reversed. For the tax portion, you have a couple of options depending on timing. If the overpayment and repayment happen in the same tax year, it's pretty straightforward - the employer adjusts their records, issues a corrected W-2, and everything balances out. But since your overpayment was in 2023 and you're being asked to repay in 2024, things get more complicated. You'll need to repay the full amount to the university, but you can claim the tax portion back when you file your 2024 taxes. You'll claim it as a "claim of right" deduction on your Schedule A if you itemize, or as a credit calculated on a worksheet included with your tax return instructions. The university should provide you with documentation showing the overpayment amount and that you've repaid it - make sure to keep this for your tax records.

I went through something super similar last year with my hospital job and found an amazing tool that helped me figure out all the tax implications. Check out https://taxr.ai - it's specifically designed to analyze situations like yours where you need to understand repayment of wages and how it affects your taxes. I uploaded my documentation from my employer about the overpayment, and it walked me through exactly what forms I needed and how to claim the tax credit when I filed. It even generated a letter I could give to my employer explaining the correct way to handle the repayment. Honestly saved me hours of stress and confusion!

Just wanted to follow up about that taxr.ai site. I was initially unsure but decided to give it a shot with my wife's university overpayment situation, and wow - it was incredibly helpful! The system asked really specific questions about when the overpayment occurred, when she received notification, and when she'll be making the repayment. It then generated a detailed report explaining exactly how to handle it on our taxes, including the specific form references and line numbers. It even created a letter we could send to the university's payroll department explaining the proper tax treatment. The university HR person actually thanked us because they weren't completely sure how to handle it either! Best part was it showed us we were eligible for a larger tax credit than we realized because of how the academic year crossed calendar years. Definitely worth checking out if you're dealing with this overpayment mess.

If you're having trouble getting clear answers from the university about this overpayment situation, you might want to try Claimyr (https://claimyr.com) to get through to an actual IRS agent. I spent WEEKS trying to get someone on the phone at the IRS to explain how to handle my overpayment situation, but kept getting disconnected or waiting for hours. Claimyr got me connected to a real IRS representative in about 20 minutes instead of the 3+ hours I was spending on hold before. The agent walked me through exactly how to claim the tax credit for repaid income on my upcoming return. They have a demo of how it works here: https://youtu.be/_kiP6q8DX5c It was seriously a game-changer because the IRS agent provided official guidance that helped me convince my employer's payroll department they were handling my repayment incorrectly.

I need to apologize for my skeptical comment earlier. After the frustration of spending nearly 3 hours on hold with the IRS yesterday and getting disconnected, I broke down and tried Claimyr this morning. I'm shocked to say it actually worked exactly as advertised. Got a call back in about 15 minutes saying they had navigated the IRS menu system, and then within another 10 minutes I was actually speaking with an IRS representative. The agent was super helpful and explained that I need to file Form 1040X (Amended Return) for the year of the overpayment together with a statement explaining the situation. For what it's worth, the IRS agent also confirmed what someone mentioned earlier - that when you repay in a different year, you can claim either a deduction on Schedule A or a credit calculated on a special worksheet, depending on which gives you the better tax benefit. Saved me hours of frustration and possibly filing incorrectly.

Just a word of warning - I had a similar overpayment issue with my previous employer and made the mistake of not getting EVERYTHING in writing. Make sure the university gives you: 1) Written confirmation of the exact overpayment amount 2) Breakdown showing the gross amount vs. what was withheld for taxes 3) Written acknowledgment that they reported this income on your W-2 4) Documentation of your repayment when you make it My former employer "lost track" of my repayment and I had to fight with them for months to get proper documentation for my tax return. The IRS initially rejected my claim because I couldn't prove I had repaid the money.

Has anyone dealt with state taxes in this situation? I repaid an overpayment to my employer last year and figured out the federal tax part, but I'm still confused about how to handle the state tax portion. Do the same rules apply?

I'm dealing with a very similar situation right now with my community college adjunct position! The timing aspect is what's killing me - they overpaid me in late 2023 but didn't catch it until this year, and now I'm stuck repaying gross wages while having to wait until next tax season to recover the withholding portion. One thing I learned from my CPA is to make sure you document WHEN you actually make the repayment, not just when they demand it. The IRS cares about the actual repayment date for determining which tax year you claim the credit or deduction in. So if you can delay the repayment until January 2025, you might be able to handle everything on your 2025 return instead of having to wait. Also, definitely push back on the university's timeline if they're being unreasonable. Most educational institutions have dealt with this before and understand the tax implications, even if the first person you talk to doesn't. Ask to speak with someone in their finance department who handles tax reporting - they'll usually be more knowledgeable about the proper procedures.

One thing that hasn't been mentioned yet is that you might want to check if the university has any internal policies about overpayment situations. Many institutions have formal procedures for handling these cases, especially for adjunct faculty where payment timing can be irregular. At my previous university, they had a policy that if an overpayment went undetected for more than 6 months, they would work with employees on a payment plan and sometimes even absorb part of the tax burden themselves. It's worth asking if Westfield College has similar policies - the worst they can say is no, but you might find they're more flexible than they initially appeared. Also, consider reaching out to your local faculty union or adjunct association if one exists. They often have experience dealing with payroll issues and can provide guidance on what's considered reasonable for the university to demand in terms of repayment timeline and documentation.

I'm going through something incredibly similar right now - overpaid by my employer in 2023, just found out about it this year, and they're demanding the full gross amount back immediately. It's so frustrating to have to pay back money you never actually received! One thing I learned from talking to a tax professional is that you should definitely push for documentation that clearly shows this was an "overpayment" rather than just a regular repayment. The IRS treats overpayments of wages differently than other types of debt repayment, and having the right language in your documentation is crucial for claiming the tax benefits later. Also, if you haven't already, it might be worth asking the university's payroll department if they can process this as a payroll correction rather than just demanding cash repayment. Sometimes they can reverse the original transaction in their system, which makes the tax implications much cleaner. It's a long shot since it's been so long, but worth asking about. Good luck with this mess - it's such a headache when employers create these problems and then act like it's entirely your responsibility to fix!

This is such a frustrating situation, and unfortunately it's more common than it should be with adjunct positions where payment schedules can be irregular. Here's what I'd recommend as your immediate next steps: 1. **Don't panic about paying the full amount right away** - while the university is correct that you owe the gross amount, most institutions will work with you on timing if you communicate proactively about the tax implications. 2. **Get everything documented before you pay anything** - request a detailed breakdown showing the original overpayment amount, tax withholdings by category (federal, state, FICA), and confirmation this will be treated as a wage overpayment correction. 3. **Consider the timing strategically** - if you can negotiate to make the repayment in January 2025, you could potentially handle everything on your 2025 tax return rather than waiting until you file 2024 taxes to recover the withheld amounts. 4. **Ask about internal policies** - many universities have established procedures for overpayment situations, especially when the error goes undetected for months. They may have more flexibility than the initial demand letter suggests. The good news is that you will ultimately be able to recover the tax portion through the "claim of right" provisions when you file your taxes. Just make sure you get proper documentation to support your claim. This is definitely fixable, even though it's a hassle right now!

I'm dealing with almost the exact same situation right now with my adjunct teaching position! The university overpaid me in 2023, caught it this year, and is demanding the full gross amount back even though I never received the tax portion. One thing I learned from my experience is to be really careful about how you phrase your communications with the university. Don't admit fault or say you "should have noticed" the overpayment - this was their payroll error, not yours. Frame it as you're working cooperatively to resolve their mistake. Also, I'd strongly recommend getting a consultation with a tax professional before you make any payments. The "claim of right" rules can be tricky, and depending on your total income and tax situation, you might benefit more from filing an amended return for 2023 versus claiming it as a credit on your 2024 return. A CPA who deals with these situations regularly can run the numbers both ways and tell you which approach saves you more money. The university will probably pressure you to pay quickly, but remember - they made this mistake and let it sit for a year. Taking a few weeks to get proper tax advice and documentation is completely reasonable. Don't let them rush you into a payment that's not structured optimally for your tax situation.

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!