The $8,000 net bonus income is taxable in 2014. You will have to claim the 2015 pay back on your 2015 return. The withholding will be in box 2 of your 2014 W-2 and will be applied toward your 2014 calculated tax. You may or may not get some back. You're stuck with the FICA tax paid; you can't get that back.
Repayments. This situation is described in IRS Publication 525. pgs
36-37. You can take a misc itemized deduction, on line 28 of
schedule A (not subject to the 2% of AGI threshold) Or you can take a credit.
The credit is computed by refiguring the tax return from the previous year as
if the income had not been received. Then the difference in tax is claimed as a
credit on the current year's return. In
the forms mode (the forms mode is not available in the on-line versions of
TurboTax[TT]), you can use the line 70 smart work sheet to enter the credit
amount on line 70; select item F, claim of right under IRC 1341 for repayments.
TT will enter "I.R.C.1341" in
the margin of form 1040. TT does not do the calculation or compare it to the
alternate deduction.
So, the taxpayer has the option of
either claiming the credit or deducting the repayment as a miscellaneous
itemized deduction, whichever provides the greater benefit. But, you cannot
file an amended prior year return. If the amount is $3,000 or less, only
the miscellaneous itemized deduction is
allowed and is subject to the 2% of AGI threshold; it goes on line 23 (instead
of line 28) of schedule A.
