My Boss Overpaid Me $48,000 and Now They Want Me To Pay It Back

Summary

The Ramsey Show Highlights - Episode: "My Boss Overpaid Me $48,000 and Now They Want Me To Pay It Back"

Release Date: July 21, 2025

In this insightful episode of "The Ramsey Show Highlights," host Dave Ramsey tackles a complex financial predicament faced by a caller who received a substantial overpayment from her employer. The discussion delves into the challenges of repaying the mistakenly received funds while navigating the intricate tax implications involved.

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Caller’s Overpayment Situation

The episode begins with a caller explaining her financial journey and the unexpected complication she encountered. After enrolling in Dave Ramsey's class in September, she and her husband made significant strides in paying off debt and building savings. However, in October, a payroll error at her large company resulted in her being overpaid by a gross amount of $48,000.

Caller’s Account:

"In the month of October, I work for a very large company, and there was a payroll error where they accidentally paid me $50,000. 48,000 to be exact. Gross payment in error... I told them before it hit my bank account, but they took so long to correct the error" ([00:06]).

Due to taxes, the net amount deposited into her account was approximately $28,000. Despite her prompt notification, the company delayed issuing a debt repayment letter, leading to complications as the overpayment crossed into the next tax year. Now, ten months later, the company is requesting the repayment of the full gross amount, necessitating an additional $23,000 from her, which she contends she has already been taxed on.

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Navigating the Tax Implications

Dave Ramsey meticulously breaks down the tax-related issues stemming from the overpayment. He clarifies that the caller should not be responsible for repaying the full gross amount since a portion of it was already taxed.

Dave Ramsey’s Explanation:

"Number one, you don't pay more than what you actually owe. And what you actually owe is the total amount, including taxes, that they overpaid you. And you should get all of your tax money back from the IRS on that amount without any trouble when you file your tax return" ([04:02]).

Ramsey emphasizes the importance of filing an amended tax return to reclaim the taxes withheld on the overpaid amount. He suggests that the overpaid $48,000, after accounting for taxes, results in the caller being responsible for a smaller net amount. Specifically, Ramsey points out that the caller should receive a significant tax refund for the excess taxes paid on the overpayment.

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Dave Ramsey’s Advice on Repayment Strategy

Ramsey offers a clear repayment strategy, urging the caller to repay the net amount available in her bank account immediately. He advises utilizing the $24,000 currently in her account to cover part of the debt, while the remaining $19,000 should be offset by the anticipated tax refund once the amended return is filed.

Key Recommendations:

• Immediate Repayment: Use the available funds in the bank to repay part of the overpayment.
• Tax Refund Utilization: File an amended tax return to reclaim the taxes paid on the overpayment, which will offset the remaining debt.
• Seek Professional Help: If her current CPA is unable to assist with the amended return, Ramsey recommends consulting a new tax professional to ensure the process is handled correctly.

Dave Ramsey’s Guidance:

"You should get all of that back. Once they submit the corrected W4W2 to reflect that you did not get that kind of income in 24... You write them the check for the money you've got, and then when you get the money back from the IRS..." ([06:00]).

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Co-host’s Perspective and Additional Insights

A co-host chimes in to express frustration with the employer's handling of the situation, highlighting the resources that a large company typically has to rectify such errors promptly. However, the co-host aligns with Dave Ramsey's proposed solutions, reinforcing the notion that the situation is manageable despite the initial mishandling.

Co-host’s Commentary:

"A little irritated here at a big company that has all the resources in the world to fix this and they didn't fix it quickly. Hate that for her, but it is. It's fixable" ([07:20]).

He underscores that the responsibility lies with the employer, not the employee, and commends Ramsey’s practical approach to resolving the issue.

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Conclusion and Final Takeaways

Dave Ramsey wraps up the discussion by comparing the caller’s situation to smaller overpayments his team has handled, often choosing to absorb the loss to avoid complicating employees' financial lives. He reiterates the importance of budgeting and proactive financial management in overcoming such challenges.

Final Advice:

"Create your free EveryDollar budget today. The simplest way to budget for your life" ([07:36]).

Ramsey's comprehensive advice provides a clear roadmap for the caller to navigate the repayment process while minimizing the financial strain caused by the payroll error. His emphasis on understanding tax obligations and seeking professional assistance ensures that listeners gain valuable insights into managing unexpected financial setbacks.

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This episode serves as a valuable resource for anyone facing similar financial dilemmas, offering practical solutions and expert guidance to navigate complex situations involving overpayments and tax implications.

Transcript

[Dave Ramsey]

Brought to you by the EveryDollar app. Start budgeting for free today.

[Caller]

I have a very complex payment situation that I need advice for. So we started. We took your class, my husband and I, back in September. October. It completely changed our life. We've been rapidly paying off debt, building up savings. However, in the month of October, I work for a very large company, and there was a payroll error where they accidentally paid me $50,000. 48,000 to be exact. Gross payment in error. I told them before it hit my bank account that unfortunately, it was too far gone at that point. After taxes, I received net 28,000. Approximately 3,300 of that was my paycheck. And again, I told them before it hit my account, but they took so long to correct the error and get me my debt repayment letter now. We're now 10 months in the future. And because it crossed tax year, they're asking for gross repayment, which is requiring me to come up with an extra approximately $23,000 of my own. And I've already been taxed on this because it was taxed in my 2024 tax return as well, which was additional money out of my pocket. They're offering to allow me to repay it in full, which would be the full 48, which net 3300 of it is mine, that I would have to repay back. And I'm not sure how I'm going to get that back in the future. But they also are giving me an option to deduct 15% from my paycheck until the debt is paid. And I'm not sure what to do. We have the money, so.

[Dave Ramsey]

Wait a minute. Let me stop. If I understood you right, you don't owe 48. You owe 48 minus 3300.

[Caller]

Well, net gross. 40.

[Dave Ramsey]

No, I'm talking about. That's the gross because the taxes were taken out on this. And you should have gotten a ridiculous tax refund this year.

[Caller]

We did not. So because it wasn't corrected, it got charged as income to us.

[Dave Ramsey]

I know, but. But the. And so the net of taxes, the taxes that were taken out on this should have created a huge tax refund for you.

[Caller]

We haven't received it yet. I was under the impression we wouldn't get that until we filed next year for.

[Dave Ramsey]

It was last year, correct? No, you're filing on the extra $48,000. It's not 48. It's 48 minus 33. Correct. 3,300.

[Caller]

Well, my gross paycheck is 5,700. 33 is my net.

[Co-host]

But you received $28,000 is what you actually got paid.

[Dave Ramsey]

That was the net of taxes. Net of taxes. But there's 23,000 in taxes withheld on it, correct?

[Caller]

Yes, sir.

[Dave Ramsey]

And you should get that back if it was last year when you file this year's tax returns. Have you not filed taxes for 24 yet?

[Caller]

That is the tax return that we were taxed on, and we. It filed for an extension, but we were.

[Dave Ramsey]

You have not filed taxes for 24 yet, is that right?

[Caller]

Correct. We did, sir. We have filed for 24.

[Dave Ramsey]

Well, you should be getting $23,000 back.

[Caller]

I. I wasn't. So I don't. I'm not sure how that works.

[Dave Ramsey]

Well, here's how it works. Okay. You paid $23,000 in that one check more in taxes than you should have.

[Caller]

Yes, sir.

[Dave Ramsey]

And so you don't have taxes on that. So you should get all of that back.

[Caller]

Immediately in 24.

[Dave Ramsey]

When you file on 24 as a tax refund. When you file. And you have overpaid your taxes. When you file your tax return, you get a tax refund. You know that?

[Caller]

Yes, sir. We still have that money, though, because they haven't. They. They didn't submit the debt letter to me until last week. So it's been almost 10 years.

[Dave Ramsey]

But you only got the net. You've only got the 28.

[Caller]

Correct. It's just sitting there for gross repayment.

[Dave Ramsey]

Yeah, I understand. Okay. Well, number one, you don't pay more than what you actually owe. And what you actually owe is the total amount, including taxes, that they overpaid you. And you should get all of your tax money back from the IRS on that amount without any trouble when you file your tax return. And the other amount, the amount that was net is sitting in your bank account. So you can give them that now, correct?

[Caller]

Yes.

[Dave Ramsey]

Okay. And then you'll have to repay them the taxes when the tax money comes. You need a tax professional, I think. I don't think you know what you're doing on your taxes.

[Caller]

Okay. Thank you. Do you have. I guess we have an accountant that does our taxes.

[Dave Ramsey]

Yeah, but if he can't tell you, you're getting the. See, if. If there's 48. They overpaid you by 48,000. Is that correct? Total.

[Caller]

They overpaid me by 43,000.

[Dave Ramsey]

43,000. Okay, I'm sorry. So 43,000. But that netted into your bank account 28,000. Too much. Correct.

[Caller]

Too much. Well, if you take out the 3300 for my. That's how much I received in total.

[Dave Ramsey]

I'm talking about. Just forget what you're due. What I'm trying to get to is the amount that they gave you, that was too much. It was 43. Too much. Net of taxes. What was that? 43.

[Caller]

It would be around 20, 24.

[Dave Ramsey]

Yeah, that sounds right. That sounds right. Okay. And so there's another 19 laying out there. You've got around 24 in your bank account right now, correct?

[Caller]

Correct.

[Dave Ramsey]

Okay. So you can give them the 24, you owe them the other 19, but the IRS should be giving you the other 19 back because you, you should not have to. You shouldn't be paying taxes on that. So you've got to. You have to file an amended return and they have to file an amended W2. The company has to file an amended W2 saying you were not due so that you pay taxes only on your proper amount. And that means that you get the entire refund back on the overpayment. Okay, but if they have not, if they've submitted your income to the IRS as including this overpayment, then that's going to screw the thing up. They need to submit your income as not including this overpayment so you can get all the tax back from the irs. So this is a two to check deal. You write them the check for the money you've got, and then when you get the money back from the irs, if your CPA doesn't know how to do that, get a new cpa because this is not rocket science here. And so then, wow, what a weird deal. Oh, man. Yeah. But no, you don't. That $19,000 and too much taxes that you have paid should come back to you once they submit the corrected W4W2 to. To reflect that you did not get that kind of income in 24.

[Co-host]

Yeah, a little irritated here at a big company that has all the resources in the world to fix this and they didn't fix it quickly. Hate that for her, but it is. It's fixable.

[Dave Ramsey]

Well, and then they're being, you know, like, we're going to give you options for you to repay this like you did.

[Co-host]

You know, they're the one that messed up.

[Dave Ramsey]

I've never done one that big. But we have overpaid people, you know, three or $4,000 or something. And you know what we do? Eat it. Just keep the money. We're so stupid. We did this. We're going to pay the stupid tax and we're going to fix it. And somebody in accounting gets their butt chewed. Create your free every dollar budget today. The simplest way to budget for your life.