When “RECUP” shows up on a bank statement, it means recoupment: someone has pulled money back out of your account to recover a prior overpayment. It isn’t a new fee or a fresh charge. It’s a reversal. The party that sent you money earlier, whether a federal agency, your employer, or the bank itself, decided you received more than you were owed and clawed back the difference.
Figuring out who initiated the entry is the first move, because your options depend entirely on the source.
Who Pulls Money Back This Way
Social Security and Other Federal Agencies
The Social Security Administration is one of the most common sources. If your benefit was calculated on outdated income or eligibility information, the SSA can decide you were overpaid and start recovering. As of March 27, 2025, the SSA’s default recovery rate for new overpayments on Social Security retirement and disability benefits is 100% of the monthly payment, meaning the full check is withheld until the debt clears unless you request a lower rate. For Supplemental Security Income recipients, the maximum withholding stays at 10%.1Social Security Administration. Social Security to Reinstate Overpayment Recovery Rate
Other federal debts can reach your bank account through the Treasury Offset Program, which intercepts eligible federal payments, including tax refunds, to satisfy the debt.2Bureau of the Fiscal Service. Frequently Asked Questions for Debtors in the Treasury Offset Program There is no cap on how much of a tax refund can be taken; the program will offset up to the full debt balance.
Payroll Corrections From Your Employer
Duplicate direct deposits, incorrect pay rates, and paid time off credited after the balance was exhausted are the most frequent payroll mistakes that lead to recoupment. Under federal law, an employer can recover the overpayment by deducting it from future wages, even if that deduction dips below minimum wage for the affected pay period. State rules vary. Many states require written notice and employee authorization before a payroll deduction, and some cap how much can be taken from a single paycheck. If a recoupment traces to your employer, check your state’s wage-payment law before agreeing to any repayment plan.
A Bank Reversing a Provisional Credit
When you dispute a debit card or electronic transaction, your bank usually credits your account while it investigates. Federal rules give the bank 10 business days to finish the investigation, extendable to 45 days if the provisional credit stays in your account during that period.3eCFR. 12 CFR 1005.11 – Procedures for Resolving Errors If the bank concludes the original transaction was legitimate, it reverses the provisional credit and sends you a written explanation. That reversal is often what you see labeled “RECUP.”
The bank also has to honor checks and preauthorized transfers from your account without overdraft charges for five business days after notifying you of the reversal, because you may have been spending as if the credit was permanent.3eCFR. 12 CFR 1005.11 – Procedures for Resolving Errors You can also request copies of the documents the bank relied on.
The Notice You Should Have Received
Federal agencies can’t quietly take money. Before using administrative offset, an agency must give you written notice of the debt amount, explain that it intends to collect through offset, let you inspect the agency’s records, offer internal review, and give you the chance to negotiate a repayment agreement.4Office of the Law Revision Counsel. 31 USC 3716 – Administrative Offset For tax refund offsets, the agency must give you at least 60 days to present evidence that the debt isn’t past-due or isn’t legally enforceable before it refers the debt to Treasury.5Office of the Law Revision Counsel. 31 USC 3720A – Reduction of Tax Refund by Amount of Debt
When the Treasury Offset Program actually intercepts a payment, it sends a separate letter explaining what happened. Never receiving the original agency notice doesn’t automatically make the offset illegal. The agency only needs to mail the notice to your last known address, which is why people who move without updating their address with the SSA sometimes learn about an overpayment when a deposit fails to arrive. You can check for an active offset by calling the Treasury Offset Program at 1-800-304-3107.2Bureau of the Fiscal Service. Frequently Asked Questions for Debtors in the Treasury Offset Program
Pushing Back or Asking for a Waiver
Social Security Overpayments
Two different forms cover two different situations, and picking the right one matters.
If you agree the overpayment happened but can’t afford to pay it back and believe you weren’t at fault, file Form SSA-632, Request for Waiver of Overpayment Recovery.6Social Security Administration. Request for Waiver of Overpayment Recovery or Change in Repayment Rate The waiver has two requirements: you must show you weren’t at fault, and you must show that recovery would either defeat the purpose of the benefits or be against equity and good conscience.7Office of the Law Revision Counsel. 42 USC 404 – Overpayments and Underpayments The SSA specifically considers physical, mental, educational, and language limitations when deciding fault.
The form asks you to document monthly expenses in detail. Gather recent utility bills, rent or mortgage statements, bank statements, medical bills, insurance premiums, and pay stubs dated within three months of the request.8Social Security Administration. Form SSA-632-BK – Request for Waiver of Overpayment Recovery The goal is to show that repaying the debt would leave you unable to cover housing, food, and medication.
If you disagree the overpayment even exists, that’s a different path. File Form SSA-561, Request for Reconsideration, to challenge the amount or the fact of the debt itself. Filing either form within 30 days of the notice date pauses collection while your case is reviewed.1Social Security Administration. Social Security to Reinstate Overpayment Recovery Rate If you miss the 30-day window, you can still request a lower recovery rate by calling the SSA at 1-800-772-1213.
Bank Reversals
For a provisional credit reversal, ask the bank for the documents used in its decision. If you believe the investigation was wrong, you can escalate by filing a complaint with the Consumer Financial Protection Bureau.
Employer Payroll Recoupments
Ask for a written breakdown of the overpayment calculation. Payroll errors happen in both directions, and the employer’s accounting should show which pay period contained the mistake and how the recovery amount was figured. If something doesn’t add up, your state’s labor agency is the place to file a complaint.
The Tax Break When Recouped Money Was Already Taxed
If you paid income tax on money you later had to return, you may be entitled to a tax break. The IRS handles this through the “claim of right” doctrine under Section 1341. If the repayment exceeds $3,000, you get the better of two calculations: a deduction for the repayment in the current year, or a tax credit equal to the tax you overpaid in the year you originally received the money.9Office of the Law Revision Counsel. 26 USC 1341 – Computation of Tax Where Taxpayer Restores Substantial Amount Held Under Claim of Right The IRS applies whichever method produces the lower tax bill.
For repayments of $3,000 or less, you can still claim an itemized deduction, but not the special credit calculation. Either way, keep records showing the original income, the recoupment amount, and when it was taken. Your bank statement showing the “RECUP” entry is one piece of that documentation.
Protecting a Joint Tax Refund From a Spouse’s Debt
If you file a joint return and your spouse has a past-due federal debt, the Treasury Offset Program can intercept the entire joint refund. To protect your share, file IRS Form 8379, Injured Spouse Allocation. The form separates your portion of the refund from your spouse’s so the offset applies only to the money attributable to the spouse who owes.10Internal Revenue Service. Instructions for Form 8379 You can file it with your return or separately after you learn of the offset. The deadline is three years from the return’s due date or two years from the date you paid the tax that was offset, whichever is later.
First Steps if You See RECUP Today
Call your bank’s customer service line and ask for the originator’s name and a reference number for the transaction. That information tells you whether the recovery came from a government agency, your employer, or the bank itself, and it dictates the next step.
For government-initiated recoupments, move quickly. The deadlines for appealing or requesting a waiver are counted in days from the notice date, and missing them means collection continues while you catch up. Gather your financial records before you call. Having your monthly expenses documented and your original payment records on hand turns a confusing phone call into a productive one.