I'm retired with a small monthly pension, and I began working part-time in Jan 2021. A few days ago, my employer stated that they had incorrectly overpaid me $3.96 per hour more than they should have. In 2021, I worked 712.25 hours and was overpaid $2,820.51. For 2022, I worked 273.5 hours through the end of Feb, and I was overpaid $1,083.06. My employer is setting up a plan for me to pay the overpaid funds, which I will pay off in 2022. My concern is with the income I earned in 2021, that I will be paying back in 2022.
Question: Had my employer paid me the correct amount in 2021, I would owe the IRS $413, instead of the $1,029 that I'll be paying this April. This is a difference of $616. There is also a difference of $261 in my California state income tax return. Keep in mind that I also have a pension income in addition to my earned income. The $2,820.51 that I owe my employer is less than $3,000 for "claim of right". If I can add the 2022 overpayment of $1,083.06 to the overpayment of 2021, then I am over the $3,000, but I don't think that I am allowed to do that. So, what recourse can I take when I file my 2022 income taxes? I feel that I will be losing out on the $877 savings for federal and state incomes taxes, had my employer been paying me correctly. Is it possible for my employer to issue a corrected W-2 for 2021 once I pay back the 2021 overpayment? If so, am I allowed to file an amended return?
