2021 income changed due to repayment of a retention bonus

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I received a retention bonus in 2021. I decided to leave the job last week and will need to repay the bonus. Should I expect my employer to send me an updated W2 for 2021 to show the reduction in income? Do I file an amended return for 2021? Can I just subtract the amount from my current W2 since I have not filed my 2021 taxes yet?

[ErnieS0]

No, you can’t subtract your repayment from your 2021 wages. And you don’t need to amend your 2021 return.

Your employer will send a corrected 2021 W-2 that will adjust your Social Security and Medicare wages (Boxes 3 and 5) and withholding (Boxes 4 and 6).

Your 2021 taxable wages (Box 1) will not change because that’s what you received in 2021. 

The repayment is part of your 2022 return, because you are making the payment this year.

You can file your return now. Or you can wait for the corrected W-2. It will not change your refund or amount due.

You can claim the repayment as a deduction or credit on next year’s tax return.

See Repayments.