Hi, I have received a signing bonus of $60,000 over 2 years ($30,000 in 2022 and $30,000 in 2023) which I repaid in full (gross amount, including all taxes: federal, state, Medicare, Social Security) as I left the company early. The repayment was done in 2023.
The employer has issued my 2023 W-2 which is adjusted only for the repayment of the later part of the bonus, i.e., my compensation in Box 1 and the taxes in Box(es) 2, 4, 6, 17 are only adjusted for the 2023 bonus amount of $30,000 repaid to the employer. They will not adjust my 2022 W-2 nor refund any over-collected Medicare or Social Security taxes, whatsoever.
After reading IRS Publication 525, as the repayment is over $3000, I plan to either take a $30,000 itemized deduction or a credit by calculating the difference this bonus would make in taxes for 2022 if I had not received it.
To keep things simple, let's assume that for each bonus part of $30,000, the Medicare taxes are $1000 and the Social Security taxes another $1000.
I would appreciate your help with some questions I have before filing to be able to recover the taxes I overpaid:
- I want to file IRS Form 843 to recover the Medicare and Social Security taxes for 2022, explicitly. If I do so, can I include Medicare and Social Security as part of the deduction or credit computation in my tax return and still claim $1000 (Medicare) + $1000 (Social Security) = $2000 on Form 843? Or I can only claim $28,000 for deduction or credit calculation and then claim the remaining $2000 on Form 843?
- For tax year 2022, do I need to submit 2 separate IRS Form 843, one for Medicare ($1000) and one for Social Security ($1000) or can I just submit one for both ($2000)?
- Is there anything else I can do to maximize the tax refund on the 2023 bonus part of $30,000? As I mentioned, I returned the full amount and the employer did not refund any taxes. Can I file an IRS Form 843 for 2023 Medicare and Social Security, or file for any deduction or credit? I think that I won't be able to as the 2023 W-2 already has a $30,000 adjustment for the repayment.
Thank you!
