ESD overpayment includes taxes I already paid - double taxation issue?

You're absolutely right to question this. When you repay an overpayment, you should only be required to repay the net amount you actually received, not the gross amount including taxes that were withheld. ESD's system sometimes calculates the repayment based on the pre-tax amount, which is incorrect. You'll need to speak with someone at ESD who can adjust your overpayment balance to the correct amount. When you file your taxes for the year in which you make the repayment, you'll also need to account for this on your tax return. The IRS considers the repayment as a reduction of income in the year you repay it (using something called the "claim of right" doctrine). Your tax preparer should know how to handle this.

i had the EXACT same problem!!! it took me THREE MONTHS to fix. they kept asking for $4,100 but like $410 of that was taxes i never even got. super annoying brcause most reps dont even understand the problem when u explain it. keep trying diff reps until u get someone who knows waht their doing.

After fighting with ESD for weeks about this exact issue, I finally got through to someone who could help. If you're struggling to reach anyone at ESD, I'd recommend using Claimyr (claimyr.com). They helped me get through to an actual ESD agent within about 20 minutes instead of spending days trying to call. They have a video that shows how it works: https://youtu.be/7DieNd3C7zQ?si=26TzE_zGms-DODN3 Once I got through, I had to specifically ask for a tax specialist or someone in the overpayment unit who understands tax withholding adjustments. The regular agents weren't able to help with the tax withholding issue.

This is a common misunderstanding with ESD's overpayment system. What's actually happening is that they're asking for the gross amount back, but you'll be able to claim the tax withholding on your tax return for the year you repay the overpayment. It's not double taxation - it's just poor communication on ESD's part about how the repayment process works with taxes. Here's what to do: 1. You do have to repay the full amount including the tax portion 2. When you file your taxes for the repayment year, you'll list the repayment as an adjustment 3. You'll either get the tax portion back as a refund or have it reduce your tax liability It's annoying but that's how the system is designed to work with the IRS reporting requirements.

has anybody notice ESD makes TONS of these "mistakes" and they're ALWAYS in their favor?????? not a coincidence imo... 🙄

This happened to me last spring. Call and ask specifically for the overpayment department. Regular agents don't know how to handle tax withholding issues. I had to be super persistent and call multiple times, but they finally adjusted my balance to remove the tax portion that had already been withheld. Don't give up!

You need to request a formal adjustment to your overpayment balance. Here's the exact process: 1. Call ESD and specifically request to speak with someone in the "Benefits Accuracy and Integrity" unit (that's what they call the overpayment department now) 2. Explain that your overpayment calculation includes federal tax withholding that you never received 3. Request a "net vs. gross adjustment" to your overpayment balance 4. Get a confirmation number for your request and ask for written documentation of the adjustment 5. If they refuse to make the adjustment, request an appeal within 30 days of receiving the overpayment notice This is a known issue in their system when calculating overpayments for claims that had tax withholding selected. Don't let them tell you that you have to pay the full amount and sort it out with the IRS later - that's incorrect.

guys my overpayment is like $6700 and im FREAKING OUT... does anyone know if they'll do a payment plan or am i just screwed???

Update: I FINALLY got through to someone at ESD yesterday after trying for over a week. The regular agent didn't understand the tax withholding issue at all and kept saying I had to pay the full amount. But I asked to speak with someone in the "Benefits Accuracy and Integrity" unit like @UnemploymentExpert suggested, and they transferred me. The specialist immediately knew what I was talking about! She said it's a common problem with their system and reduced my overpayment amount by the tax withholding portion (about $275). She's sending me updated paperwork showing the correct amount. Thank you all for your help - especially the specific terminology to use. Made all the difference!