Hi,
I received a sign on bonus in 2021, and when I left the job in 2023, 2/3 of the sign on bonus had to be repaid. The initial sign on bonus was taxed as normal wages. The repayment was taken from my last 2 paychecks, without income tax but there was medicare and social security tax put aside for it by the employer. In 2023, my old employer sent me a correct W-2, but the corrected amounts were only in regards to medicare and social security "salary", not also for the earned income wages [they never changed this number]. I got an e-mail from the HR department that I can still claim the repaid amount as a claim of right, but wanted to check how to do this and if this was correct.
Thanks
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The Claim of Right is explained more in the article below. However I will add some information here about how to report on your tax return to determine if it applies to you and how you prefer to enter it on your tax return.
Claim of Right
Taking the Income Reduction in TurboTax (most common)
Taking the Credit in TurboTax (Must use TurboTax Desktop)
There are two components to taking the credit in TurboTax. The first part entails determining the amount of the tax that was overpaid in the year the income was received. This requires using the TurboTax Desktop product (or another method) to determine what the tax liability would have been without the income.
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