My employer miscalculated an overpayment made to me in 2020. I have been struggling to find the right words to describe my scenario.
My employer payroll department asked me to pay back $5k, which I did in the same year Dec 2020. When I asked them to re-analyze the overpayments later on in Jan 2021, they discovered I only needed to pay them back $1k. So, they sent me a payslip in March 2021 reflecting $4k gross from which they withheld taxes and applied a portion of it to my 401k (which was what I had setup for normal earnings).
Questions:
1) Do they need to give me a 2020 corrected W2? I want to make sure I do not get charged tax for the $4k that should not have been repaid by me in the first place. That was money in my savings that came from previous years' earnings that were already taxed. I don't want to be double taxed.
2) How can I make sure that for year 2021, I don't get taxed on the $4k, either? It's not wages... Should I expect a 1099 MISC, instead of a W2?
Thank you.
