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Recoup overpayment - is this right? Texas Texas

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  • Recoup overpayment - is this right? Texas Texas

    (I posted this down the street when it was still a hypothetical, and cbg suggested I come back home and post it here.)

    I moved from Georgia to Texas the beginning of the year. My Georgia-based company agreed to keep me on as a remote employee, and set up payroll in Texas. I also went from full-time with benefits to part-time without benefits, at the same hourly rate.

    From 1/1 to today, they have been paying me as a full-time, Georgia employee. They have paid me for about 400 hours and I've worked about 300. To repay the difference, they are calculating 100 hrs X hourly rate, and subtracting out what they've paid in benefits. They calculate that I owe about $1,800.

    Their method of calculations doesn't seem right to me, since it doesn't take into account pre-tax benefits. I think they should ignore hours and calculate what my pay should be as a part time employee without benefits. (Roughly, they paid 400 hours @ $16K in gross, $13K of which was taxable, about $8700 net after taxes and post-tax deductions. They should have paid 287 hours @ $11K gross, all of which was taxable, about $8200 net.)

    Is either of us close to being right?

    As an aside, Patty was one of the folks who helped me when I first posted close to a decade ago. I wish I'd gotten to follow her posts more - she was lovely.

  • #2
    Well, I posted down the street. Apparently, I'm coming across as playing games with my employer. Crap.

    HR admits this was their error. I reported my hours as agreed. I was not eligible for benefits at all in 2016.

    They are looking at this gross, and I'm looking at it net. Which is right and why?

    Comment


    • #3
      The problem with long posts is we tend to get too much of the wrong information. I am going to give a short example. See if it applies.

      Bob is paid $10/hr for 1,000 hours in 2016. Everyone agrees that Bob should have been paid $9/hr for those 1,000 hours. Per IRS for federal taxes only, since everything is in the same year, the employer should do a "pro forma" where they calculate "what we did do", "what we should have done", and "difference". Since it is the same year, the employer should get back the net on the difference calculation, and treat it a lot like a check cancel, with the net going to the same account as the employee's check and not payroll cash. If we crossed years, then we would do it on a gross basis. Now IRS rules are federal taxes and wages only, but most/all states follow the same rules, as do federal statutory benefits such as 401(k) and Section 125.

      Its been a while since I have the read the publications, but this should be spelled out in IRS pub 15 or 15A. Talk to the payroll manager or HR manager. Someone at your company probably knows what the rules are.
      "Reality is that which, when you stop believing in it, doesn't go away".
      Philip K. **** (1928-1982)

      Comment


      • #4
        Originally posted by DAW View Post
        The problem with long posts is we tend to get too much of the wrong information. I am going to give a short example. See if it applies.

        Bob is paid $10/hr for 1,000 hours in 2016. Everyone agrees that Bob should have been paid $9/hr for those 1,000 hours. Per IRS for federal taxes only, since everything is in the same year, the employer should do a "pro forma" where they calculate "what we did do", "what we should have done", and "difference". Since it is the same year, the employer should get back the net on the difference calculation, and treat it a lot like a check cancel, with the net going to the same account as the employee's check and not payroll cash. If we crossed years, then we would do it on a gross basis. Now IRS rules are federal taxes and wages only, but most/all states follow the same rules, as do federal statutory benefits such as 401(k) and Section 125.

        Its been a while since I have the read the publications, but this should be spelled out in IRS pub 15 or 15A. Talk to the payroll manager or HR manager. Someone at your company probably knows what the rules are.
        Thank you for replying, DAW. My HR rep is already working with payroll. Using your numbers and their logic, I would pay back the $1000 difference by working 111 hours ($1000/$9 hr), off the books.

        Using your example, taking the net as 75% of the $1000 difference, we have $750 for the EE to pay back. Say the ER also deducted FSA payments during this time period, to the tune of $200. The employee was not eligible for the FSA, and the ER will recoup this from ACME FSA Company. Would the FSA money be subtracted from the net difference, $750, for a payback amount of $550?

        Reality check - it actually comes down to working about 50 hours off the books. ::sigh:: Should I just build a bridge and get over it rather than risk dying on this hill?

        Comment


        • #5
          Frankly, if you were overpaid and accepting benefits for that long and didn't report it, many employers would terminate you for dishonesty.
          I post with the full knowledge and support of my employer, though the opinions rendered are my own and not necessarily representative of their position. In other words, I'm a free agent.

          Comment


          • #6
            [QUOTE=henbob6;1248251]Thank you for replying, DAW. My HR rep is already working with payroll. Using your numbers and their logic, I would pay back the $1000 difference by working 111 hours ($1000/$9 hr), off the books.

            Now you are getting into a whole other legal issue with working off the books. We would never allow that to happen. We might reduce your hourly rate to the minimum wage until you are paid but but working off the books could cause a world of hurt for your employer, even if the original mistake was theirs.
            I find that the harder I work, the more luck I seem to have.
            Thomas Jefferson

            Comment


            • #7
              Originally posted by ElleMD View Post
              Frankly, if you were overpaid and accepting benefits for that long and didn't report it, many employers would terminate you for dishonesty.
              Understood, but not the case. My boss and I have been in frequent contact with HR. Discussions started in November, and we got approval in December. We follow up after every paycheck.

              Comment


              • #8
                [QUOTE=Morgana;1248259]
                Originally posted by henbob6 View Post
                Thank you for replying, DAW. My HR rep is already working with payroll. Using your numbers and their logic, I would pay back the $1000 difference by working 111 hours ($1000/$9 hr), off the books.

                Now you are getting into a whole other legal issue with working off the books. We would never allow that to happen. We might reduce your hourly rate to the minimum wage until you are paid but but working off the books could cause a world of hurt for your employer, even if the original mistake was theirs.
                Oh, I got that - I appreciate the warning!

                Comment

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