How should an employer recoup a wage overpayment from an employee if the repayment will be made in a subsequent calendar year?

Author: Alice Gilman

The employer should take the following steps:

  1. The employee must pay back the gross amount of the overpayment by writing the employer a personal check, or the employer may recoup the amount by payroll deductions;
  2. The employer must reimburse the employee for his or her portion of the Social Security and Medicare taxes attributable to the overpayment; and
  3. The employee must provide the employer with a signed and dated statement acknowledging the reimbursement of the overwithheld Social Security and Medicare taxes and certifying that he or she has not and will not seek a reimbursement from the IRS for these taxes.