Overcollections

If more than the correct amount of New York State, New York City (if applicable), and Yonkers (if applicable) income tax is deducted from any wage payment made to an employee, the amount of the overcollection should be repaid to the employee in the same calendar year in which the overcollection occurred. The employer must get, and keep as a part of their records, a written receipt from the employee showing the date and the amount of the repayment.

Any overcollections not repaid to the employee within the same calendar year must be reported and paid to the Tax Department with Forms NYS-1, Form NYS-45, or both.

If you discover an overcollection, you must make the appropriate correction indicated below.

Overcollection discovered prior to filing Form NYS-45 for the same calendar quarter If you have not yet filed Form NYS-45 for the quarter in which the overcollection occurred, you must correct the overpayment by entering the correct amount of the withholding tax liability on the applicable form and repaying the overcollection to the employee.

Overcollection discovered in a subsequent calendar quarter If you discover an overcollection after the calendar quarter in which it occurred, but prior to filing Form NYS-45 for the final quarter of the same calendar year, you must file an amended return on Form NYS-45 for the quarter in which the overpayment occurred. If the employer shows an overpayment or an overcollection discovered in a later quarter, and has repaid the overcollection to the employee, this overpayment may only be refunded. The employer may not elect to credit the overpayment to a later quarter.

An employer cannot refund an employee any overcollection of New York State, New York City (if applicable), or Yonkers (if applicable) taxes, that is the result of:

an incorrect number of allowances reported on a federal Form W-4, provided to the employer prior to tax year 2020,

an incorrect number of allowances reported on Form IT-2104, or

an employer using zero as the number of allowances because the taxpayer filed a Form W-4 for tax year 2020 or later but did not provide Form IT-2104.

The employee must file a New York State personal income tax return to receive a refund of withholding tax.