Expert: Shirley McAllister, CPP, PHR - 4/23/2009

Question
If a payroll check was issued in error and could not be voided because it was automatically deposited, is there a way to not be liable for those payroll taxes?  The employee repaid the net amount, but what about all the taxes on this check that should never have been cut.

Answer
If you already paid in the taxes than you have to file a 941X to recoup the employer taxes paid in error.

YOu will have to issue a W-2C. If it is this year you can adjust the amounts before you print the W-2.

The employee will have to file forms when he does his income taxes to recoup taxes already paid.

That is for an employee that no longer works for the company or if it was done last year.

If it is done this year you can adjust the taxes for a current employee against the future taxes he owes. It would be voiding the check back into the system. The gross wages would also be reduced by the wages paid.

If you void a check it should do it for you in the system.

Shirley