Just found the original email asking for the bonus back. Here is what they included:
Special tax rules apply if the gross wages were processed to an employee’s compensation and, in a subsequent year the employee repays the unearned portion of the wages/bonus. In accordance with IRS requirements (see IRC 1341 and the IRS "Instructions for Form W-2C"); the wages paid in the prior year remain taxable to the employee for that year. The employee is not entitled to file an amended return to recover the income taxes on those wages. Instead, the employee is entitled to a deduction (or credit, in certain cases) for the repaid wages on his or her Form 1040 for the year of repayment.
Upon repayment, the firm will file a Form W-2C for the year that the wages were included in your W-2. The Form W-2C will reflect a reduction in Medicare wages and, if applicable Social Security wages equal to the amount of taxable income repaid. The Form W-2C WILL NOT change the amount of your federal and applicable state taxable wages or income tax withholdings from the amounts reported on the original W-2. For additional information, please refer to IRS Publication 525, Taxable and Nontaxable Income, and the instructions to Form W-2C as a reference. In order for us to process your W2C and obtain a refund of your Social Security and Medicare tax overpayment, please sign and return the attached FICA consent form via email to the xyz mailbox.
It sounds like I need to claim this as a credit in my 2022 tax return (I received it in 2021, repaid it in 2022)? Do I file it under the other credits as an earlier comment seemed to recommend? Or should I claim it as a negative income (if that's even possible)? They told me IRS considers the money used in 2021, which is why they are not adjusting any of the other boxes in the W-2.
