1. What exactly is the process for filing a W-2C and getting a refund via Form 1040?
If you repaid amounts reported as income in the prior year -
----- if the amount is $3,000 or less, it is a miscellaneous itemized deduction subject to the 2% limitation.
----- if the amount is more than $3,000, it is a miscellaneous itemized deduction which is not subject to the 2% limitation.
If the amount was received under a "claim of right" (you had unrestricted use of the funds but later found out you didn't), you have one more choice: if the amount is more than $3,000, you can choose instead to claim a credit for the additional tax incurred by reporting the repaid amount in income. See IRS Publication 525 for an explanation of that method. It is available at: http://www.irs.gov/publications/p525/ar02.html#d0e9279
Look under deductions and credits, then other deductible expenses, then less common expenses if the amount is under $3,000.
Turbotax on-line does not support the "claim of right" computation. Turbotax desktop, in the forms mode, permits the credit to be entered in the "smart worksheet" above line 72, but you still would need to compute it manually.
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) NO
3. Do I file the W-2C on my next year's (2023) tax year? NO
4. Is there any way to get the state/federal/income taxes refunded for the full bonus payment in 2021 see above #1 for fed ... check with your state for their procedure
or can i only get the social security / Medicare back for the refund? https://www.irs.gov/forms-pubs/about-form-843
