I had received wages in error during unpaid personal leave in 2014. I brought this to the attention of my employer in 2015 and repaid the appropriate amount (~$6000) to them. They are now planning to issue a W2C and also asking for my consent to file 2014 OF W-2c to obtain a FICA refund on my behalf. Does this mean I will need to re-file my 2014 income tax return as well? The FICA taxes are a small amount and I would just prefer to reimburse that amount to my company directly rather than go through the hassle of re-filing 2014 taxes. Also, can I get a deduction in my 2015 tax return for the amount I repaid my company? Appreciate any advice on this topic.
You shouldn't need to amend your 2014 return.
Your employer is only supposed to amend the W-2 boxes for Social Security and Medicare. They are not supposed to amend box 1 for your taxable wages. That means you will not need to amend your 2014 tax return.
For your 2015 tax return, you need to go through the procedures of a "repayment" to get a deduction or credit on your tax return.
https://www.irs.gov/publications/p525/ar02.html#en_US_2014_publink1000229600
You shouldn't need to amend your 2014 return.
Your employer is only supposed to amend the W-2 boxes for Social Security and Medicare. They are not supposed to amend box 1 for your taxable wages. That means you will not need to amend your 2014 tax return.
For your 2015 tax return, you need to go through the procedures of a "repayment" to get a deduction or credit on your tax return.
https://www.irs.gov/publications/p525/ar02.html#en_US_2014_publink1000229600
Thanks TaxGuyBill! Couple of clarifications -
1. Is there IRS guidance on the topic of which W-2 boxes should be updated in this scenario?
2. Is a W-2c mandatory even if I reimburse the Medicare taxes that my employer paid (it's only a nominal amount)? Social Security isn't applicable as the paycheck in question was late in the year and I was maxed out on Social Security by that time.
1.) The W-2 instructions show what to do under "Repayments".
<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/iw2w3.pdf#page=11">https://www.irs.gov/pub/irs-pdf/iw2w3.pdf#page=11</a>
2.) That is what the directions are, so that is what should be done.
Thanks again! Your advice and clear guidance was really helpful!