re: Payroll Screw-up...need Advice

The company is trying to avoid you having to "pay" taxes on the trip, by basically providing additional money to you to cover the tax implications of the trip. This way, you don't have to pay the taxes out of your own pocket. That is what is meant when they said "the goal was to gross up..."

Do you normally get a refund, or do you normally owe taxes?

If you don't send the money in, your refund will be less, or, you may owe more than normal. If you end up owing more than $1,000, you *might* owe penalties and interest. Depends on your tax situation.

I would go with option 3. What is option 3? Look at your last paystub, figure out what the additional amount is that was paid to you, and sent it in as an estimated tax payment to both the IRS and whatever state you are in.

I say this because I would not necessairly trust the company to get it right with option 2, and option 1 *might* cause a headache down the road.

Just don't forget you made the estimated tax payment when you prep the tax returns next year.