If you repay your 2022 bonus in 2023, your employer will give you a corrected 2022 W-2.
Your Box 1 taxable wages will not change because you received your bonus in 2022. You’ll deduct that amount on your 2023 tax return. However, your employer will refund any Social Security and Medicare withholding from repayment.
If you are repaying $3,000 or less, you cannot claim a tax credit or deduction on your 2023 return for the payment.
If you are repaying more than $3,000 you can either deduct the amount or claim a tax credit based on the amount of tax you would have paid without the bonus.
The tax credit computation is more complicated, but you usually save more money. Each situation is different so try it both ways next year.
Also, check out @guitarkenn's awesome advice!
See Repayments
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