Sorry to revive an old thread, but I'm encountering this situation with a bonus received in 2020 and repaid in 2021.
I received a $5,000 bonus that ended up being just shy of $3,600 after taxes. When repayment was requested from my former employer, they explained that the full $5,000 needed to be repaid and the included explanation was "Per the IRS, the employee owes the entire gross, and we will only adjust his Social Security and Medicare wages/taxes. Once the repayment has been received, we will process a corrected 2020 W2." So luckily I was still holding the bonus in my savings account, but I still came out of pocket $1,400 to repay them.
(Not being a tax pro, I didn't understand the distinction of "we will only adjust SS and Medicare wages")
I ended up in this thread because I've now repaid the full bonus, received my W-2c and entered it, but I'm not seeing my 2020 refund change at all. I was expecting it to increase some. From what it sounds like here, if my former employer won't directly refund me the excess SS/Medicare taxes then I'll be eating that overpayment of $382.50 off the $5,000 bonus? The only real action left to take is to wait a year and file a Claim of Right claim on my 2021 taxes in the hope of recouping the remaining $1,000-ish that I'm still out-of-pocket? Hoping someone (@Opus 17?) can confirm if my understanding is correct or not.
