At my previous employer, I relocated in 2022 and was given a $5,000 lump sum relocation payment, which was grossed up (meaning they paid 22% to the IRS plus an additional state amount). This was included in my 2022 income. However, I left the company in 2023 before the repayment period expired, and had to pay back 50% of the lump sum, which worked out to ~$3,600. Since this is greater than $2,500 (50% of what I actually got), I'm assuming I paid for some of the grossed up tax payment.
They've issued me a W2c, but it only shows a wage reduction in Box 3 (Social security wages) and Box 5 (Medicare wages and tips), plus a withholding deduction in Box 4 (Social security tax withheld) and Box 6 (Medicare tax withheld). If I enter these changes, it shows I get no additional refund. My questions are:
- Should they have also reduced wages in Box 1 (Wages, tips, other compensation), in addition to Boxes 3 and 5?
- Should adjusting my W2 to reflect my W2c be enough to calculate any additional refund I should get, or do I have to claim this via Repayment of Claim of Right Income?
Thanks in advance.