repayment of wages

[mchristopher]

Received a retention bonus  in 2018 (greater than $3000) that was then re-payed in 2019. Can I claim this as a deduction in 2018? Or only in the year of repayment? the company provided a W2-c for 2018 but did not change box 1, is this the correct protocol?

[Kat]

Was the W-2c issued to change, specifically, the retention bonus that was repaid?   If Box #1 didn't change, what was changed?

[mchristopher]

The only boxes changed on the W2c were 3,4,5,6. The retention bonus was re-payed in entirety. It was paid out in 2017 and 2018 and repayed in 2019.

[Kat]

It's still unclear why your employer issued a corrected W-2 with changes only in the boxes you indicate.  I suppose they could have issued the corrected W-2 in anticipation your repayment, but that would be a questionable practice.  Maybe the W-2C was in no way related to your bonus?

How did you make repayment?  Did you issue a repayment check to the employer, or did they simply withhold the bonus amount due from earned wages in 2019? 

You'll need some documentation that you made the repayment to the employer that you'll report on your 2019 tax return, since that's the year repayment was made, unless the adjustment was made internally by reducing your actual earned income by the amount of repayment.

I know this is confusing; it is to me, too.