Tax Information With A Mother's Touch
Published by Eva Rosenberg, MBA, EA
Volume 6, Issue 271 August 13, 2004
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Tax Information With A Mother's Touch Published by Eva Rosenberg, MBA, EA Volume 6, Issue 271 August 13, 2004 |
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 » From: a school in New Jersey Dear TaxMama: We have a terminated employee that was overpaid & owes the library a small fine of $34. The employee is owed a stipend. Can the fine & overpayment of wages be deducted from the stipend? We are just concerned about the tax consequences as well as the legal aspect. Thank you, Joan  Hi Joan, I am so sorry, I don't think I could give you a good answer. This sounds more like a legal issue than a tax question. But let me point out some issues or questions, and you take it from there, OK? 1) Why was he overpaid? Was it a math error? Was he paid in advance? Did he submit erroneous time cards? Is he paid a flat fee per period - and he was terminated before the period ended? 2) Is the stipend considered wages, or is it a reimbursement - like auto expenses etc. or is it a flat fee of some kind? If it's not wages, you may not be able to deduct the wages from it. They may be two different animals. If they are wages, then you should have no problem deducting the overpaid wages - if the overpayment was an error. If the overpayment arose from the employee not working out the full period of time, I am not sure. You'll need to read your employee manual or contract to see how that works. As to the library fine? If he has a non-wage stipend, I'd deduct it from that. However, I wouldn't deduct it from wages. On the other hand, when he got library privileges, he signed some agreement. What does that agreement say? And what does it say about fines? Also, his employment contract may mention library privileges. What does that say about fines? This is a good time to review the wording of employment contracts, library contracts, and other facilities usage contracts. You may want to incorporate into the employment contract, for the future, wording about being able to deduct fines and unpaid fees from wages after X period of time or upon termination. Once it's in a contract or agreement signed by the employee, you should have no trouble. Good luck! Best wishes, Eva Rosenberg Your TaxMama  |
 
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| Library of Congress - ISSN 1532-0790 Copyright © 2000-2007 - Eva Rosenberg |
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