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Recoup a Wage Overpayment - Worked Example

Author: Alice Gilman

An employee who receives an overpayment of wages is usually not entitled to keep it. The method an employer may use to recoup the overpayment depends on whether the recoupment occurs in the same or a different calendar year than the overpayment.

This Worked Example illustrates the payroll tax treatment of overpayments recouped in the same and a subsequent calendar year, as well as which tax returns must be filed by an employer to correct the overpayment.