A heavily pregnant Taranaki woman is devastated after getting a surprise bill from Inland Revenue for nearly $2000 after being unknowingly overpaid her Working for Families entitlements.
The woman, who wanted to remain anonymous, is 36 weeks pregnant with her second child. But instead of getting ready for her bub, she's stressing over how to pay back debt she never even knew she was accruing.
Earlier in the year, Newshub shared a similar story from a Napier couple who were heartbroken when they were slapped with a $3000 Working for Families bill just days after paying off the debt they took on when their premature son almost died.
Christopher van de Laak and his partner spent years paying down their debts in the hopes of buying their first home, but this dream was shattered when they got the bill. Van de Laak said it was a "kick in the guts".
"I'm trying my best," he said. "I work 40, 50, 60 hour weeks to try and keep a roof over my family's head and the cost of rent and the cost of food is what it is, but now I've got to figure out how to pay this money back. I don't want to be in debt for years."
He said Inland Revenue needs to take greater care to ensure it's not putting vulnerable families into debt and if it does because of its own miscalculation, it should waive the costs.
"These are accountants. They need to be a little bit more onto it because this is not money that is just willy-nilly. That money actually physically did help us through with our little one because we had a lot more on our plates with him."
Now another family is speaking out about issues with the way Working for Families is paid, calling the surprise debt a kick in the guts.
Taranaki mum Sarah* was stoked when her son was born in May 2021. After soaking up as much time as she could at home with him, she returned to work.
But like many new parents, was forced to take a lot of time off to stay home and look after her son as he battled an endless stream of sickness from daycare, which meant her income wasn't consistent.
In the chaos of parenting and working she barely noticed the $30 a week she and her husband were getting in Working for Families payment. But because she worked in finances, she always made sure to update Inland Revenue when her income changed based on how much she was working.
Now two years later, Sarah is pregnant again and was looking forward to spending time at home with her children – until the surprise bill arrived telling her she owed $1700 from overpayments while her husband owed nearly $400.
The bill was an unpleasant surprise and infuriated Sarah. While she appreciated the extra $30 a week, it didn't even cover a tin of formula and she told Newshub she wishes she never even got it now she's been lumped with a $2000 bill.
"I appreciate that people who really need that can really have it. But for us, I would rather have not had that because getting that big bill in one go is just like, 'Oh my God'. It was just such a kick in the guts," she said.
It's added more stress to an already stressful time and Sarah is terrified it's going to happen again when her second child is born.
To add insult to injury, she now has to come up $2000 while also adjusting to being a one-income household after quitting her job to be a full-time mum.
"It's really stressful and it's just so unfair they feel they can do that to people," she said.
Sarah feels she's being punished for trying to get back into work after having her son and is frustrated it took Inland Revenue so long to realise she had been overpaid.
"You think you're doing the right thing by letting them know you're getting paid and it comes up on your My IRD account showing where you’re working and this is your income, it's updated every month so it's not like they can say, 'Oh we didn't know until the end of the year'," she said.
Sarah said there's no way they will be able to pay the debt back in a lump sum and is hoping to work out a payment plan, but an added bill is the last thing she needs right now.
"We're in that middle-income bracket. We bought a cheap house that's about half an hour from the biggest city. It's nothing fancy. We don't even have a dishwasher. We [put our all] into that and to still work hard and to get this back...It's like actually we're getting absolutely nothing for being middle-class earners and we're almost worse off than some people on the benefit.
"I know some people are getting like $700 a week and they get to spend time with their kids at home, they don't have to go anywhere. Then we try to work and have to pay back money."
A spokesperson for Inland Revenue told Newshub they can't comment on Sarah's case but the most common reason someone ends up with Working for Families debt is because they didn't regularly update the agency about changes to their income.
"To make sure someone gets the right Working for Families payments, they need to keep us up to date with any changes in their family. If we don’t hear from someone – no message or calls – then we won’t know the family circumstances have changed," the spokesperson said.
They said people need to tell Inland Revenue when their family income changes, either parent's hours of work change, children come into or leave their care, shared care arrangements change, a child starts or stops receiving a benefit, a child works 30 or more hours a week, a child is still at school after turning 18, parents’ relationship status changes, a family member moves to another country, any private child support payments (paid or received) change, their name or contact details change or they want payments to go to a different bank account.
"Working for Families payments for families are to help people raise their family. Entitlements are based on yearly family income and family circumstances. If someone is overpaid there are options for repayment and Inland Revenue will work with people to find a solution that best fits a family’s situation," the spokesperson said.
"Instalment arrangements can make things easier by splitting up what is owed over weekly or fortnightly repayments. They can be set up by applying in myIR; sending us a message in myIR or calling us.
"Payment is by either direct debit, credit or debit card, internet banking or by using future Working for Families payments."
They added if paying money back isn't possible "right now", Inland Revenue will "work with parents to come up with a solution and make sure repayments are at an amount people can afford".
They also said Inland Revenue runs an "early intervention programme" to identify customers who look like they are off track and going to end up with an overpayment of Working for Families.
"There is also work happening to give us more accurate information to project income and predict overpayments. This work will help make sure people get the right amount and give them confidence they won’t end up with a debt."
Child Poverty Action Group's Susan St John has been calling for changes to Working for Families for some time. Earlier in the year St John told Newshub the current system isn't fit for purpose and people shouldn't be put in debt by the Government.
St John said Inland Revenue is supposed to adjust payments in real-time so overpayments don't occur but that clearly that isn't happening.
She said the current system is far "too complicated" and Inland Revenue is often rude and confrontational to people who get into debt.
*Sarah is a fake name to protect her anonymity.
