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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 2574
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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I am about to receive a $900000 overpayment back to me from

Customer Question

I am about to receive a $900000 overpayment back to me from an employee that was overpaid. Do I have to pay taxes on this?
Submitted: 2 months ago.
Category: Finance
Expert:  ABC Accounting Group replied 2 months ago.

I am assuming it is an overpayment of wages - then, the best way is to issue the employee a w2c

Expert:  ABC Accounting Group replied 2 months ago.

If you have a Sole Proprietorship and took the full deduction, including the overpayment, you would have to add it back in the year of receipt (if cash-basis).

Customer: replied 2 months ago.
what does that mean add it back? as income?
Expert:  ABC Accounting Group replied 2 months ago.

If you had the $900k in wages on your Schedule C - you would have to add it back to income the year your received it back. To minimize your taxes - maybe use the amount for additional expenses you can deduct from your return - just an idea.

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