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Unautherized deductions from wages Tennessee Tennessee

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  • Unautherized deductions from wages Tennessee Tennessee

    A week ago I learned my employer has been withholding state taxes for a state i have not lived in or worked in during 6 years of employment. They have rolled back the current year state tax deduction, propose to hire a CPA to fix all my W2's & to file 3 years of back tax returns for a refund (3yr statute of limitations for filing tax returns). They don't seem to know what to do about the 1st 3 years, mentioned casually its the COO's decision if anything, and even have begun to insinuate it is in part my own fault. My W-4 is has been correct since my hire date, I have never asked for this deduction. I think I get they are trying to minimize what they owe me by using the tax returns to refund me, however I am starting to be concerned they don't feel liable for part of or the whole amount of the 1st 3 years.
    I am not good at taxes, or law, or money in general... I may be wrong but they do owe me for all those wages, right? I am unsure if I need an lawyer or go to the Dept of Labor?

  • #2
    You should report the issue to the state department of labor if the issue of the first three years is not resolved.
    I am not able to respond to private messages. Thanks!


    • #3
      Your W-4 might have been correct, but did your W-2s for those 6 years show state taxes withheld from the state you haven't lived or worked in? Did your paystubs show it each pay period? Who did your income tax calculations each year? I can kind of see their point if they did have it on your paycheck/wage documentation and you missed or ignored it for 5-6 years. I process payroll/W-2s as part of my job and always advise employees to LOOK at their paystubs and W-2s for any inconsistencies because the earlier you catch the error/mistake the easier it is to fix. I always wonder how a payroll mistake can go for so long with neither side noticing it personally. Maybe it's because I review every paystub for every employee each payroll period before I print them.

      That said, I still think they owe you for all years if it was their mistake and even if they can't recover it from the state. You can't be fired for making a wage claim, but it wouldn't surprise me if this puts a black mark on your performance record with the employer.


      • #4
        3 years may (probably is) the statute of limitations past which you can claim a refund. How have you not discovered this when you filed your state taxes for the correct state you should be paying? If the answer is you haven't filed your state income taxes in 6 years, I don't have much sympathy for you, and I don't think it's your employer's problem either. You don't "ask" for a tax deduction, the employer is required to withhold it by law whether you fill out a tax form or not. And the W-4 covers your federal tax withholding. It has nothing to do with state. You should file an equivalent form to the W-4 generated by the correct state.


        • #5
          The Tennessee income tax doesn't apply to wages, only to things like dividend income, so that might have contributed to why the issue wasn't caught sooner. I think some people in Tennessee don't file state returns unless they have that other type of income.
          Last edited by Marketeer; 10-21-2015, 09:17 AM.
          I am not able to respond to private messages. Thanks!


          • #6
            My residential state does not have a state income tax deduction, so there would be nothing to file & no TN W4. if there was one, I would just be credited the amount to the correct state income tax and be done.
            Yes it was on my W2's every year..
            Yes I had seen it on a paystub, as the state the taxes were paid to is also the state my employer is based in, it didnt cause a red flag. I am not a tax expert.


            • #7
              I do think you should have known whether you owed taxes in the state where they were being paid. For example, I know TX doesn't have state income taxes so if I saw state income taxes deducted from my paycheck and on my W-2, I would raise a red flag the first time I noticed. It is not totally your employer's fault that you don't know enough about your own tax situation either, especially if you work/live in a state different than the employer. Employer's are cautioned against giving any tax advice and the most they could have said was for you to consult a tax adviser. If you do your taxes yourself, you might consider buying one of the softwares on the market, because this error would have been caught much sooner. And if they withheld and you didn't owe, you could have requested the refund each year from that state based on what was on your W-2.

              Again it is the employer's mistake, but should have been caught a lot sooner. And I can understand their frustration.


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