@Anonymous wrote:
@Opus 17
It looks like the payroll vendor made a mistake and paid me an extra paycheck in 2021. So this a slightly different than my original question where I assumed it was a 2020 error, but it's a 2021 error.
They are suggesting that I refund them the extra paycheck (gross) and they can send me a corrected W2 for 2021 which will show the corrected wages paid but will still show the additional taxes paid by me for the extra paid paycheck which I can then claim a refund for excess taxes paid (Fed, State and FICA) in my 2021 returns (due in April 2022). That sounds like a reasonable fix. Am I missing something?
This is the best situation, but there is still something that needs clarification.
They can issue a corrected W-2C that changes the box 1, box 3, box 5, and box 16 (state) wages. They can't refund your box 2 (federal tax withholding) or box 17 (state tax withholding) because those amounts were already sent to the IRS or the state. You will get credit for those withholding amounts on your tax return, which will reduce your tax owed or increase your refund.
However, it is different with the box 4 and box 6 taxes (social security and medicare). If they reduce your box 3 and box 5 income, they should reduce your box 4 and box 6 taxes and give you that money back directly. (Or you should repay the gross minus those taxes.) They will have to file an amended form 941 anyway, to change your gross wages and correct the W-2, so it's not much extra work to refund or credit you with the social security and medicare tax. If they don't refund the SS and medicare tax (or let you pay the gross minus those taxes) then you will still have to file a form 843 to get a refund of those taxes, since there is no refund procedure for those taxes on your federal tax return.
