You had to repay the company for a prior year. That does not affect w2 box 1 wages for this year. If you had to repay income that you thought was yours and you paid taxes on it last year, then normally you would take a credit for the difference in taxes that would have existed last year on this year's return.
Here are the step to achieve the desired results.
- See Turbo Tax article What is a Claim of Right Repayment. which covers repayment for one year. If you repaid amounts from multiple years, you will need to do the same for each year.
- See also Pub 525 for examples of how to figure the credit. You will want to determine which is better for you, the credit or the deduction.
- If the credit is best, you will need to download the desktop version and move your .data file so you can pick right up where you left off.
- See also: How to download TurboTax Desktop software from TurboTax.com
- In addition, you may need to file Form 843 for Medicare and Social Security taxes to be refunded, also in Pub 525 just below the example.
If you take the credit, it will show up on Schedule 3.
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