I recently discovered that I have been overpaying my health benefits by double for 2 years now? The company I work for is going to be giving me a refund but said they are going to take taxes out of it. My feeling is, if anything they need to pay ME for all the taxes I have paid on it in the first place. They screwed up and are now going to try and double tax me on money I should have never paid in the first place. Is it legal for them to tax me on the refund and should they have to refund the money I have already paid in taxes? Thanks for any help!!
2007-12-11 17:11:44 · 3 answers · asked by Kari H 2 in Business & Finance ➔ Taxes ➔ United States
Sounds like your health care payments are taken out pre-tax, which is pretty common. So you DIDN'T pay tax yet on this money, so that's why you have to pay it now.
2007-12-11 17:29:17 · answer #1 · answered by Judy 7 · 2⤊ 0⤋
The healthcare premiums you pay through payroll deductions are virtually always pre-tax deductions under a Section 125 plan. Since you never paid tax on that money you must do so now that it is being returned to you. This is NOT double taxation since the money was never taxed in the first place.
2007-12-11 17:34:17 · answer #2 · answered by Bostonian In MO 7 · 1⤊ 0⤋
No, it is not illegal for them to take taxes out of the money. If you were not double charged originally then you would have had to pay taxes on the money so there is no difference now.
Your employer must follow tax laws, while it may seem unfair, if they did it any other way they'd be breaking the law.
2007-12-11 17:15:49 · answer #3 · answered by lornaandjerry 1 · 1⤊ 0⤋