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

Author: Alice Gilman

If the employee pays back the overpaid wages in the same calendar year as that of the overpayment, the employee repays the net amount (i.e., less the taxes withheld) of the overpayment. The employer should reduce the employee's taxable wages and associated taxes for that calendar year and show this amount on the employee's Form W-2, Wage and Tax Statement.