Gov’t saying I was overpaid and they want $$ back

[Anonymous]

Long-time fed here. I've seen things like this happen. I would arrange a payment plan as soon as possible. The government isn't very reasonable when it comes to things like this and fighting it will be a waste of time. Unless you have an agreement, they will start withholding tax refunds, etc. until they get their money.

[Anonymous]

Some agencies have overpayment review boards. See what’s possible.

[Anonymous]

TAKE NOTE: You should probably refile your taxes going back to 2017, or whatever year you started the job. (There may be a three-year limit to correcting tax returns.)

You need to get corrected W-2s from the agency ASAP because you would have paid taxes on the extra money they were giving you. Out of $16k, let's say you received $12k after taxes. The government will now collect $16k and your only way to recoup the taxes is to file an amended return. Otherwise you end up paying $16k + (say) $4k for the taxes you already paid.

Something solar happened to me and I stupidly didn't file amended tax returns.

[Anonymous]

Anonymous wrote:They will get it back no matter what. This isn’t a private sector employer who will lose interest: they will just summarily take it out of a future check, withhold it leave payout if you depart federal service, and ultimately just send the IRS after you.

My favorite: I was overpaid (double payment for a spot award) and HR wanted me to pay them the gross amount back. I brought the stub and even my bank statement to show I’d obviously only gotten the net. It took a supervisor to realize how dumb this was. Federal HR is neither smart nor fast (but they’re dogged: you will pay it back) b

I think you came out ahead on this one. If you got paid an extra $1K and you got $700 net and your W-2 is later corrected (or issued correctly in the first place) to not include the $1K of income you would get the extra withholding back.

[Anonymous]

Anonymous wrote:TAKE NOTE: You should probably refile your taxes going back to 2017, or whatever year you started the job. (There may be a three-year limit to correcting tax returns.)

You need to get corrected W-2s from the agency ASAP because you would have paid taxes on the extra money they were giving you. Out of $16k, let's say you received $12k after taxes. The government will now collect $16k and your only way to recoup the taxes is to file an amended return. Otherwise you end up paying $16k + (say) $4k for the taxes you already paid.

Something solar happened to me and I stupidly didn't file amended tax returns.

Not OP, but I was told I would get an amended W-2 AFTER the overpayment is paid back. And a blurb directing me to IRS Publication 525 - you can claim the the amount as a deduction on your tax return for the year in which it was repaid but are not entitled to file an amended return.

That sounds like it's gonna be fun to figure out.

[Anonymous]

Did their information cover any extra social security and Medicare tax that you paid on that money? Do they discuss the mechanism to recover those amounts (~7.65% of wages)?

[Anonymous]

Publication 525 does:

Repaid wages subject to social security and Medicare taxes. If you had to repay an amount that you included in your wages or com- pensation in an earlier year on which social se- curity, Medicare, or tier 1 RRTA taxes were paid, ask your employer to refund the excess amount to you. If the employer refuses to refund the taxes, ask for a statement indicating the amount of the overcollection to support your claim. File a claim for refund using Form 843.

Boy, doesn’t that sound like fun.