Mother overpaid by Work and Income told to pay it back with interest

A mother of two overpaid her Working for Families entitlement has been told she has to pay it all back - with interest. She says she had no idea she was being paid too much. 

It turns out there are 40,000 other Kiwis in the same boat, and almost 10,000 of them are beneficiaries.

Mother-of-two Kirstie was shocked to receive the letter telling her she needs to pay a huge tax bill. The beneficiary says she had no idea why she owed the IRD $568. 

"It's horrifying," she told Newshub. 

Kirstie, who didn't want to use her surname, immediately phoned IRD. 

"The amount of debt in your account is only going to increase because of the interest," she was told. 

The word "interest" caused Kirstie some concern. She discovered Work and Income had overpaid her Working for Families entitlement, and that the IRD want her to pay back what she was overpaid with interest.

"That's the worst thing about it. Until it gets sorted it's just going to continue... continue growing," she said. 

The overpayments were made in 2014 and Kirstie says she always trusted Work and Income was only paying her what she was entitled to.

"Would you ever be able to pay it back? No, I struggle now," she says. 

Kirstie's rent is $550, and she spends $70 a week on food. There isn't much left over.   

 A social activist who knows her case says she shouldn't have to pay.  

"The mistake lies somewhere between Work and Income and IRD," says Auckland Action Against Poverty's Alistair Russell. 

"They're the ones who stuffed it up. And they cannot punish the poorest families in this country for their administrative incompetence."

Kirstie waived her privacy to allow Newshub to ask Work and Income and IRD why she's being hit with this bill and the interest.

IRD still cited privacy issues for not being able to answer, but did tell Newshub that 40,000 Working for Families customers are in debt and more than 9000 of them are beneficiaries.

Work and Income say they are now in touch in with Kirstie about her situation.