You get the federal income taxes refunded by taking a special tax deduction in the year you make the repayment, or by claiming a credit under IRC 1341 "claim of right". The special deduction is included in all versions of Turbotax, but to claim the credit, you need to use Turbotax installed on your own computer from a CD or download so you can make a manual entry on the forms. You can use whichever method gives you the largest refund. Turbotax will not calculate which is best for you, you have to do that.
To get state income taxes refunded, you probably need to make a claim of right on your state tax return. You would have to research how to do that for your specific state.
You can only use form 843 to get a refund of Social Security and Medicare taxes withheld.
1. You can always ask. I don't know if this would count for an exception.
2. Employment.
3. 1040
4. Print the email and include it with your other documentation.
5. You should attach your calculations for each year separately, showing what your reported W-2 wages were, what the withholding was, what the wages should have been according to your employer, and what the withholding should have been (box 4 and box 6). Remember that box 4 has an annual maximum, so if your income was, for example, $200,000 and should have been $180,000, the repayment will not actually result in a reduction of your box 4 social security tax or a social security tax refund, since both the original and corrected wages would be more than the social security max. Box 6 withholding does not have an annual maximum. But because of how social security withholding is calculated, you need to consider each year separately and not as one lump sum.
Your package should include a clear letter of explanation, copies of any correspondence from the employer about the need to repay the wages, including the fact that they will not be processing a refund of social security and Medicare tax. Include your calculations for each year, and include copies of your W-2s. I would also include proof of the repayment of wages as a lump sum (canceled check or copy of electronic receipt).
