All Things Tax

All Things Tax

Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.

Posts: 2
Registered: ‎07-31-2013

employer overpayment and W-2 correction

My employer mistakenly overpaid me during January-March 2016. The problem was discovered and corrected in April 2016, and they asked me to return the overpayment amount, which I did at the end of April 2016. The amount I returned to them was the sum of the net paycheck amount of the extra paychecks that I should not have received.


I thought this was all resolved until I got my 2016 W-2 and the amounts shown on it for wages still include the overpayment amount I returned to them in April 2016. I requested a corrected W-2, which they took 2 months to produce. When I finally got it (on April 1st 2017) it still doesn't seem right to me. They subtracted the overpayment amount (that I returned to them in April 2016) from the social security wages and medicare wages, and then re-calculated the social security and medicare witholdings somehow. They did not correct anything else.


Firstly, I don't understand why they took the overage amount that I returned to them, which was net pay, and subtracted that from gross wages. That means the corrected W-2 amounts for social security and medicare wages are still higher than the gross pay that I actually should have earned for the year.


I also believe they should have corrected the federal and state wages as well because I gave them the extra money back last year. They are saying that IRS rules prohibit them from changing the federal and state wages even though the W-2c form I received has boxes on it for that purpose. So they are reporting federal and state wages to the IRS in excess of what I actually earned last year. That pushes my AGI up artificially and makes me ineligible for the child tax credit and reduces the amount of education credits I can claim. If the reported the correct amount of wages, I would be eligible for the child tax credit and get the full amount of the education credits.


The only IRS documentation I have been able to find regarding a situation like this is the "Repayments" section of Publication 525, but it doesn't really seem to apply because it's based on the assumption that the overpayment was received in one year, and the repayment was made in a later year. If that's the case, it explains how you figure out what your taxes really should have been for the year in which you were overpaid, and then you claim a credit against your taxes for the year in which you paid the overage back. But that's not the scenario I have - the overpayment was discovered and paid back in the same year in my case. That's why I really feel like the employer should have corrected my W-2 to show the actual amounts I retained after repaying the overage.


Has anyone ever run into a situation like this before?






Trusted Council Member
Posts: 6,191
Registered: ‎02-23-2016

Re: employer overpayment and W-2 correction

Hi Chuck,


Welcome to the H&R Block community.



You can actually fill out a corrected W-2 form yourself which will allow you to put the correct amounts on it.  You'll need to use Form 4852 (Substitute W-2).  Note that if you do this you must mail your tax return along with the substitute W-2 form to the IRS as you cannot e-file when attaching a substitute W-2.


Form 4852 may be used when your employer either refuses to correct your W-2 or does not make the corrections accurately and will not correct the situation.


If you have any other questions I'll be glad to help.



Senior Tax Advisor (Tampa, FL)