Thanks again for walking through with me the various steps to resolve the issues, I will summarize below the steps to complete both the federal and CA state returns. Could you please help me see if everything is correct?
Since I resigned in April 2025 from a company I joined in Dec 2024 (and received a signing bonus in Dec 2024), I paid back my unvested bonus back to them. I want to claim back my $5,000 federal withheld and $1,000 CA state withheld for those unvested months. Here’s what I plan to do:
Federal Return:
Schedule 3, Part II, Other Payments and Refundable Credits: I entered $5,000 on L13b (Section 1341 credit for repayment of amounts included in income from earlier years).
CA State Return:
I entered $5,000 (federal credit amount) on Schedule CA (540), Part II, Line 16, Column B.
For the Form 540, Line 78 (Total Payments), I will write “IRC 1341 $1,000” on the dotted line to the left of Line 78.
I will OVERWRITE the original amount with $1,000 addition (eg, $2,645 will now become $3,645).
I will only efile the federal return. Once it’s accepted by the IRS, I will print the CA state return for mail filing and write in the IRC 1341 notation.
