Thanks, Harlan, that's what I thought. I will push them to
rectify it.

Thanks everyone, again, this has been very helpful.

Lori

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- quote -

that's not the point, Seth. a city occupational or income
tax is withheld after taxes, so any refund of same should
not be taxable, neither subject to income taxes OR more
FICA.

Employer goofed up.

ChEAr$,
Harlan Lunsford, EA n LA

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Hi, thanks for all the replies. I did already speak to the
people at my office before coming here, and they were not
helpful. I know what was done, and this is what was done:
the check for the amount overpaid went through payroll by
itself as a separate check. All the deductions were taken
which had already been taken from this amount in 2004 --
federal, social security, state, disability, etc.

I don't see how the money I overpaid would be a deduction in
2004. I'm not sure what that means. This money was
included in my salary on my W2 for 2004, but the taxes were
not included in the local tax box of the W2. In other
words, when they "corrected" the original error, the only
thing they changed on my W2 was they reduced the taxes paid
by the $500 (approximate for simplicity) amount. No other
numbers changed. So that $500 was included in my salary
amount I reported for taxes for 2004.

I have talked to the people in the payroll department and
they say they have done nothing wrong. I feel I am losing
money -- because that $500 is now being included in my
salary per the W-2 both for 2004 and 2005 and I paid not
only federal and state taxes but social security -- TWICE.

If Harlan is right, what do I do about it? I already told
my company and they said basically too bad, they did nothing
wrong. And if Harlan's wrong, what am I missing?

Thanks so much!

Lori

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truelori wrote:

- quote -

Simply put, you are right on target, Lori. Your company
screwed up, and should have refunded you 100% of the
overwithheld tax with no withholding consequences.

ChEAr$,
Harlan Lunsford, EA n LA

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- quote -

I don't see any way you're actually _losing_ money, other
than the interest on the overwithheld amounts (if any) for
the rest of the year.

You overpaid $500 in taxes in 2004; that's a deduction for
2004. It was refunded (to your company, instead of you) in
2005; that's taxable income for 2005. Some amount was
withheld; that counts as tax paid, and the amount withheld
for city & state count as deductible, for 2005.

Seth

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Hi, thanks for the response. What I'm trying to say is that
firstly, I'm not sure an accountant can even actually
straighten this out -- isn't it my employer that's making
the mistake? So why should I have to pay an accountant
anything? And I'm not saying it would cost me $500, but
what I mean is that it would cost me more money on top of
the additional money I am already losing from this problem,
so by the time I pay someone to answer a quick question I'm
going to be losing more money than I have already lost on
this (not the $500, I did not lose the $500, I overpaid
$500, which I got back but then it was taxed again).

My question is simply if this was done the right way --
essentially it seems to me money being sent through payroll
two times is being doubly taxed. Am I wrong about this?
Thanks again

Lori

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truelori wrote:

- quote -

I really can't tell from your post what happened. The
problem is in "went through payroll, so taxes were taken
out". This reads like an assumption on your part, that if
something goes through payroll then it is taxed. That is
not the case; not everything that "goes though payroll"
(i.e., appears on your paycheck stub) was taxed.

It should be easy for you to check the local NYC tax (3.65%
?) for this particular pay stub - what amount was taxed, the
correct amount or that amount plus the "over 500"? (and
this is the more important one to check as it really is a
tax, while state and federal deductions are witholding which
is a little different).

There is another simple step to take - ask the people who do
your payroll for their explaination of what was done.

Then if you still have questions, ask here again.

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"truelori" <lori[at]truelori.com> wrote:

- quote -

If you find the right accountant, it should not cost you
$500 to get this straightened out.

Wayne Brasch, CPA, M. S. Taxation

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Hi, my employer made a mistake last year on my taxes and
took out too much local tax. I don't know why, but instead
of me just getting a tax refund when I filed my taxes, the
local (NYC)department of finance refunded the money to my
employer. Now the employer has written me a check for the
amount overpaid (over $500) and it went through payroll, so
taxes were taken out.

Am I being taxed double? It seems to me I am, since this
amount was not taken OFF my wages from last year. Therefore
it will be in my wages for 2004 AND for 2005. I don't know
what to do. If I pay a tax accountant to answer this for me
I'm going to end up losing even MORE money on this stupid
mistake my employer made.

Any advice? Thanks

Lori

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