@ahmed041 wrote:
Hi @Opus 17:
I received $12K sign-on bonus in 2017. I left the company in 2018 and returned $5K. I filed my 2017 tax and 2018 tax without knowing what is discussed here. I didn't receive any W-2C (Never asked for one). Never signed for the 941-X, etc. Can I amend my 2018 tax (1040-X) taking $5K deduction and explaining in Part III with supporting document that I paid back the sign on bonus? As per 525 page 34-35, method-1 works for me.
FYI- From My HR "You did receive a $12,000 sign on bonus in 2017. And we withheld $5,000 of that sign on bonus over the last two paychecks you received in 2018. This is coded as a miscellaneous deduction not a reduction in gross wages. We will not be sending you a corrected W-2, there is nothing to correct."
You need to examine your 2018 W-2. Suppose your gross salary was supposed to be $10,000 per month and you worked 5 months. If the repayment was deducted from your wages before tax, then box 1 of your W-2 would report your wages as $45,000. In that case, you can't amend to claim a tax credit because you were already not taxed on the repayment.
Look at it this way. Suppose you were paid $50,000 and your W-2 shows $50,000 in wages, and you are taxed on $50,000 in wages. Then you write them a check for $5000. In that case, since you repaid them with after-tax money, you can deduct the repayment or take the claim of right credit, since over 2017-2018, you were taxed on $5000 more than your net wages.
But if you were paid $50,000, and the company withheld the $5000 on a pre-tax basis and only taxed you on $45,000, you have repaid them with pre-tax money. Over your employment, you were taxed on your net wages after repayment (extra tax in 2017, less tax in 2018). So you can't take the claim of right credit or deduction again.
It sounds like "this was a miscellaneous deduction not a reduction in gross wages" means that you were taxed on all your wages, including the repayment that was withheld. If true, you can file an amended return for 2018 to claim the deduction or credit. But I don't feel confident in expressing a definitive opinion without a detailed review of your W-2 and your pay stubs (which I will not do--don't send that kind of documents to a rando on the internet!)
If you were only taxed on your wages after repayment, then the fact that you were not taxed on that amount in 2018 makes up for the fact that you were taxed on it in 2017 and you can't claim another deduction or credit since that would be double dipping.
