Tax
Oct. 30, 2025
Repaying compensation to employer? How to recover withheld taxes
Whether it's an unearned bonus or pay returned for other reasons, such as legal violations, you can often recoup the taxes -- though with the IRS, timing and details matter.
Robert W. Wood
Managing Partner
Wood LLP
333 Sacramento St
San Francisco , California 94111-3601
Phone: (415) 834-0113
Fax: (415) 789-4540
Email: wood@WoodLLP.com
Univ of Chicago Law School
Wood is a tax lawyer at Wood LLP, and often advises lawyers and litigants about tax issues.
Repaying compensation is generally not something done voluntarily. Sure, a CEO may trumpet willingness to slash his future salary to $1, usually with a less publicized deal to tie boatloads of compensation to equity and stock price performance. However, any time an employee is paid compensation with taxes withheld that are paid over to the IRS, and then later is saddled with an obligation to repay some or all of it, repaying the compensation raises awkward tax issues.
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