Expert: Shirley McAllister, CPP, PHR - 3/16/2009

Question
The company I work for mistakenly paid me double my normal quarterly bonus.  I brought the mistake to their attention and they decided to take the repayment of the error out of the next 4 paychecks.  I just received my paycheck today and noticed that they are taking the gross amount of the bonus out of each check instead of the net.  I already paid taxes on the bonus, so it seems that this would lead to double taxation as they will tax the amount again in three months.  Should the repayment be of the net amount of the bonus, or are they correct in taking the gross out of my regular paychecks?  Thank You.

Answer
If you pay back the gross amount they must somehow adjust your taxes so you are not paying in too much Fica and Medicare. The federal and state are okay because you can be refunded them when you file your income tax at the end of the year. If they do not adjust taxes you will end up paying in too much fica and medicare and they will also.


Shirley