Hello,
I received a relocation lumpsum of $17,000 and the tax gross up on my W-2 was $24,166.68 in year 2020. Tax part (Federal + FICA + Medicare) was $7166.68. In year 2021, I left the company and since I hadn't satisfied a 2-year agreement, I was supposed to payback the full relocation including tax gross up.
But the company asked me to only pay back the actual lumpsum of $17,000 and mentioned that tax portion will be recouped directly from Government.
I did receive a corrected W-2 for year 2020 but this only changed the boxes for Medicare wages and Medicare taxes (Reduced the total Medicare wages by $24,166.68 and corresponding tax reduction by $350.4) with explanations on why other boxes won't change (Box 1 and 2 will not be changed since correction is not in the same year of tax filing and IRS does not allow this, Box 3 and 4 wont change since my social security wages does not fall below the IRS cap, so technically no change in my social security taxes).
Since Company will work with IRS to reverse the portion of my relocation taxes, should I file the W2C for year 2020 at all? If I do file, I'm not sure how I can let IRS know to not pay me the excess tax refund but instead pay the company. It would have been simpler for company to have just asked me for a full gross repayment and easier for me then to file a claim of right, but for the above case, I'm not sure the best way to handle.
Can you please share some insights on how should I go about handling the situation?
Thank you
