NCEP - Work woes - owe my company $9k?!?!

[downtoearth]

Edited - Thanks for all the advice, really. You can get a gist of the issue in the following posts, but I wanted to remove this content.

Thanks, again. I'll keep you posted on the resolution, and I really can't believe how many people this has happened to before.

[kath16]

1) this sucks

2) you should be able to set up some sort of re-payment plan with your payroll to deduct $X over the course of Y weeks to pay it back. ETA: you should come up with a number that YOU are comfortable with and push back if they try to get it back in a very short time frame or something that you're not able to do.

3) I would ask for help from them with determining how it would affect your retirement contributions. my assumption is that it doesn't affect it greatly, but they should be able to tell you more based on your plan and/or point you toward customer service with whomever runs your retirement plan

4) your W-2 will accurately state what they have (over)paid you and what has been taken out. assuming you'll pay back into the next calendar year, next year's w-2 will accurately reflect what they paid to you. so it shouldn't include the payback amount


does that make sense? I can't imagine that it would dramatically affect your tax bracket/percentage, but it might be a different total that you'd be paying.

sorry that this happened

[definitelyO]

what? pretty sure that we would call it a loss and not make an employee pay us back for our mistake.
I would have your employer tell you what they think it is and provide all the back up documentation, etc.. .then take it to someone (CPA maybe?) to verify. should be based on your current state of residence I'd guess. I'd also give a quick call to the Dept of Labor in your state to see if there is any recourse.

[VillainV]

Might be worth cross-posting on MM to see if anyone has any good advice.

My employer (government) would set up a repayment plan that would probably spread the repayment out over 12 months. I agree that you should make sure it works for you before agreeing to it. Unfortunately, even though it was their error, you didn’t catch it either and you essentially got an interest-free loan out of it. I know it sucks having to rework your budget because of a repayment though ☹️

[WOT?*]

Depends on the company whether they will require you to pay back or if they'll write it off. I've been there (with my practice husband when we were newly married...right at Christmas, too.) and it sucks. They pulled it from his checks with little/no warning and no accommodation. It was "you pay it back at this amount for this period of time." Of course it was the government (military) so it's not like we had a lot of leeway to negotiate. But by law (disclaimer: afaik, ime, and not an attorney) they can require you to pay it back.

Most companies will require you to pay it back, even if it's their mistake. It's your responsibility to know what your checks should be and all that. If your company is accommodating, they can extend the time they require to pay it back and will automatically deduct it from your checks. The part that will suck is that this will be coming from a reduced paycheck (since you were used to this "overpayment" amount) and they of course will be basing it off the "corrected" amount less the "loan" you received from their error. See if they'll delay reimbursement until January so it doesn't bite you at Christmas. (My ex and I got bit the week before Thanksgiving to the tune of 25% of his check when the Navy discovered they'd not processed his paperwork correctly for a promotion so technically he hadn't been promoted for the six months prior. Ouch. That was a very lean First Christmas Together.)

The laws will be based on the state where you reside, not the company headquarters. You may want to speak with a labor lawyer just to verify that all information is correct. You're salary (exempt or non-exempt may make a difference, for example).

Go over your budget (MM seems awfully slow these days) and you may want to further reduce retirement for the time it will take to pay the balance off if there aren't corners to cut in your budget right now. Sucks, because it's better to pay into retirement right now while you're younger and have more time for it to compound. And once the debt is paid, you can increase the retirement contribution to include the loan payments until you've caught up, since you should be used to this leaner budget.

I'm sorry you have to deal with this. Especially at the end of the year.

[goldengirlz]

Rather than a repayment plan that’s retroactive, can they withhold a certain amount from each paycheck going forward? This way, everything will even out in terms of taxes, retirement, etc. and they won’t have to recalculate how much you actually received vs. how much went to the government, etc.

But that really does suck. It can’t hurt to consult a lawyer.

[fiddles]

You might want to chat with a tax person. If you repay within the same tax year (so by EOY) you would repay the net amount. Any repayment that carries over to the next year you repay the gross amount, meaning before taxes and all withholdings are taken out.

[aliciabella]

The best way to figure it out would be to recalculate what your paycheck should have been with 30 hours. That would have the added taxes and take the difference and repay it over the next year. The taxes and laws are based on where you reside. The biggest issue you could have is in regards to taxes and you don't want to fuck with that. I would see a CPA and see what if anything is owed to you. GL!

[Jalapeñomel]

My DH had this happen to him, and we had to write a check or have payroll deductions.

[Miss Phryne Fisher]

This happened to me with the NY Retirement Fund. The school did not take out my $$ and should have. I ended up having to pay back about 5k. They took some from my paycheck over the course of 2 years. over 42 paychecks it didn't hurt as hard.

[boxertdog]

Yeah, I'd talk to my own accountant and not trust what they are saying - they f'd it up in the first place, right? 

[krystee]

Does that mean you will need to essentially take an $18K paycut next year?! That would not be feasible for me so in my case I would probably work the 40 hours for a 30-hour salary to pay it back if they'd let me. If that is not an option, I'd beg to pay it back over two years. I would consult a tax person either way.

[vanillacourage]

You might do some googling before talking to a lawyer because apparently in some states the employer has to catch the error within a specific period of time.  
www.nolo.com/legal-encyclopedia/can-employer-deduct-previous-overpayment-paycheck.html

Generally speaking, yes you’ll have to pay it back (sucks and I’m sorry) but you can ask that $X be withheld from future paychecks rather than cutting them
a check, and the timing/amount shouldn’t be a major hardship. Be sure to get in writing how much they are withholding and the duration of the term. 

[downtoearth]

Thanks everyone - looking into this more tonight and now I have more info. It will not be paid back in the same tax year - can’t get it paid back anytime soon without too much stress. My budget will already go down $350 (after tax) and so it will be another $700/check to get it out if I do it in about 7+ months. That would really hurt us to be down about $1k per check.

And I didn’t notice bc I got a bonus right about then, and I upped retirement and dropped dependent care withholdingns at the same time, so I thought that bump was due to dropping withholdings. Ugh. This just sucks and I do expect to have to pay it back based on google-law. Just so pissed at my company and myself.

[bears]

This happened to me--they kept on paying me over maternity leave by accident and since I want monitoring that account in that time period, I got back to work and said "oh shit."

I repaid it over several months, but HR was very open to extending that time period. Good luck, I'm sorry you're in such a shitty situation.

[downtoearth]

Dec 10, 2018 18:02:59 GMT -5 krystee said:

Does that mean you will need to essentially take an $18K paycut next year?! That would not be feasible for me so in my case I would probably work the 40 hours for a 30-hour salary to pay it back if they'd let me. If that is not an option, I'd beg to pay it back over two years. I would consult a tax person either way.

Pretty much - I guess I didn't think of it this way. It will basically feel like I not only just got docked in pay, but I also owe them that full $9k that I had been using in our budget. But in reality, nope, I was basically just borrowing their money instead of owning it. My budget will feel like I just lost $18k, and yes, it's going to come at a big cost, but it wasn't mine to get keep a 25% raise - that's significant. Good thing I was at 18% retirement - I basically am going to drop that to 10% to get company match and then take a $1000/month drop in pay from what I was used to, but it's really only a $400/month drop from what I was supposed to be getting. With that I should be done in about 7 months. We're not those people who earn 3-figure salaries, so it will hurt us a lot in the next 7 months - I'm just so mad at myself for not noticing sooner b/c it wouldn't hurt so bad.

[seeyalater52]

I have no advice but I’m so sorry. This sucks and even worse that it was their mistake and fixing it will put so much pressure on your budget. I get it, this would be a major, major hardship on our incomes too.

[NewOrleans]

This is seriously outrageous bullshit!

[dottyblue]

Please speak with an employment lawyer; at least see if you can get a free consult. Depending on what state you are in your employer may not legally be able to recover these funds at all. Or they can request the funds back but possibly not by payroll deduction (which you could argue puts undue burden on you to repay via personal check so you can negotiate the amount down.

And as another poster indicated, if you pay it all back in 2019, you are effectively taking an $18k pay cut for the year as compared to 2018 income. That is not insignificant

[aliciabella]

You also overpaid in all deducted taxes as well which may be a bitch to recoup but I am not a tax attorney. I would ask to extend the re-pay period over 2 years or so and see if some can be deducted through your bonus if you receive them annually. I am sorry. Definitely talk to a tax attorney. Most have free consults. That really fucking sucks

[vanillacourage]

Why are you trying to pay it back in just 7 months?  I would stretch it to at least 12, even 18 unless there’s something about 7.  That is, if you feel confident you’ll still want to be with the company that long. 

[mbcdefg]

I have no advice but I’m sorry this happened to you

[aurora]

I'm sorry you're in this situation.

I would definitely ask the company to pay for a consult with a tax specialist since it was their error. I was overpaid one calendar year, they didn't catch it in time, I repaid the next year, and I ended up paying significantly more in taxes as a result than I would have if I were just paid the right amount each year. It sucked. At least if you can talk to someone about your taxes now you'll have some time to start planning and may be able to work something out that will help 2018 a little bit.

[ellipses84]

That really sucks. I would probably try to get a free phone consultation with a tax and/or employment attorney. I feel like since it is their mistake they could at least spread it out over a longer period of time and negotiate the number down since you may have tax implications from it that are difficult to truly calculate. I think it’s perfectly fair to say it was their mistake and yes you should have noticed but they could own up to cover half of the amount. If you had quit before they noticed, I don’t think they’d have any recourse and would be out that money from their own accounting error.

I had something similar happen once, but it was $5k and my hr/accounting were clueless and thought what they were doing was ok, but later found out it wasn’t allowable by the IRS. They did let me pay it back out of my paychecks over several months.

[boiler717]

I am so sorry this happened. It is a huge issue with how it affects your finances. I think your employer should cover some if not all of the error! I would escalate and explain the effective $18k paycut for a year, and see what they offer. I would probably prefer to send them checks vs. payroll deduction because I wouldn’t want to authorize them to be in charge of the deduction.

[readyin07]

Oh man. I would be pissed. Others have better advice, but at the very least I would expect them to pay for an external lawyer or accountant to determine how this implicated your taxes and I would want that amount deducted from the total owed (unless there is a way to fix it that doesn’t leave me open for audits and all that Jazz). Presumably you contribute to a retirement plan and I would expect that any match they made on the higher salary would be forfeited for you to keep. I would expect at least a year to pay it back

[Michelle]

All the advice in here is making my head spin. I can’t imagine how you feel. I am so sorry this happened to you.

[taratru]

This would absolutely bankrupt us, so I am so sorry for where you are. Why only 7 months though? I'd be stretching that payback as long as I possibly could.

[underwaterrhymes]

Ugh. I’m so sorry this happened.

It happened to me too, only in my case:

1) It was a company for which I was no longer working. I had been contractor status with them and when they made a one-time payment to me, they accidentally turned on a bi-weekly payment instead.

2) We didn’t catch it for some time because it was similar to the amount that comes in from our FSA account.

3) I’m the one who caught it - not them - when I got my tax forms. I was like, WTF?! and figured out what happened and alerted them.

Ultimately they issued the correct tax form and I have been paying them back monthly. It’s not awesome, but I’m grateful I didn’t have to pay it all at once and it wasn’t a complicated repayment structure since no taxes were taken out and I had no benefits.

Your organization should be the one to figure out how this will work and should be flexible with repayment since it was their error. ❤️

[secretlyevil]

downtoearth, I have no advice. I'm just so sorry you're having to deal with this and figure out how to move forward. My only thought is to consult with your own lawyer/accountant. I am really floored by this kind of BS.