Context: In 2021, I was paid a retention bonus with my employer if I stayed with the company for two years. I stayed for 1 out of those 2 years and, now, I need to payback part of that bonus. My employer is filing a W-2C on my behalf and mentioned that the wages paid in a prior year remain taxable to me for that year. Additionally, they mentioned that I cannot file an amended return to reclaim the income taxes for that year, 2021 (the year the bonus was paid). They mentioned that I could, however, get a deduction for the bonus repayment in the Form 1040. The Form W-2C will reflect and not change the wages or state/federal/income taxes from my original W-2 from 2021, but with a reduction of the Medicare/ Social Security wages. for the income repaid.
Questions:
1. What exactly is the process for filing a W-2C and getting a refund via Form 1040?
2. Do I amend the tax year that the original bonus was paid to me, 2021? (I assume not based on what the employer stated)
3. Do I file the W-2C on my next year's (2023) tax year?
4. Is there any way to get the state/federal/income taxes refunded for the full bonus payment in 2021 or can i only get the social security / Medicare back for the refund?
Thank you in advance
