Gross relocation repayment - How to get tax refunded?

[bcbkakljdasdas]

I was asked by my former company to pay back the gross amount of the relocation payment I received ($14214.63 gross that led to $10000.00 net) which I did. I received the payment in 2021 and paid it back in 2022. I contacted HR at my former company asking if they could send me an adjusted wage form to indicate this. However, I heard back from them saying that the company cannot refund FICA taxes (I suppose this would be the Social Security and Medicare taxes) from a prior year and that I would need to file for any refund with the federal tax authorities. Because of this, they said they couldn't issue me a W2-C. 

Does anyone know what the best course of action should be for me from here? How should I go about getting the federal tax refunded? And is there any way to get the FICA tax refunded as well? Note that there was no state income tax involved as the State I was working in does not have one.

[rjs · Accepted solution]

You do not get a direct refund of the federal income tax that you paid. Since the amount you repaid was more than $3,000 you can get a deduction or a credit on your 2022 tax return. The two options were explained to you when you asked about it in March and again earlier this month, at the following links.

Paying back relocation tax refund

Returning gross relocation payment tax refund

You are correct that FICA is the Social Security and Medicare taxes. Regarding those taxes, IRS Publication 525 says the following.

"Repaid wages subject to social security and Medicare taxes. If you had to repay an amount that you included in your wages or compensation in an earlier year on which social security, Medicare, or tier 1 RRTA taxes were paid, ask your employer to refund the excess amount to you. If the employer refuses to refund the taxes, ask for a statement indicating the amount of the overcollection to support your claim. File a claim for refund using Form 843."

You cannot use TurboTax to file Form 843.

Please do not post any more separate questions about your repayment. It's too confusing and hard to follow, and hard to see the whole picture, when information about one issue is scattered in multiple threads. If you have further questions about the repayment, add a reply to this thread.

[bcbkakljdasdas]

Thank you very much for the response. The response I received to the post in March (this one: https://ttlc.intuit.com/community/tax-credits-deductions/discussion/paying-back-relocation-tax-refun...)  is indeed very helpful. Will doing what is said there handle only the federal tax part of the repayment or also the FICA taxes? I assume only Federal but just wanted to double check.

Regarding FICA taxes, just to confirm, I should ask my former employer to provide a statement indicating that I am indeed owed a FICA tax refund and I should attach that with Form 843 when I send it to the IRS?

Also, I believe this is Form 843:

https://www.irs.gov/pub/irs-pdf/f843.pdf

I notice at the top that it says the following:

Use Form 843 if your claim or request involves:
(a) a refund of one of the taxes (other than income taxes or an employer’s claim for FICA tax, RRTA tax, or income tax
withholding) or a fee, shown on line 3,
(b) an abatement of FUTA tax or certain excise taxes, or
(c) a refund or abatement of interest, penalties, or additions to tax for one of the reasons shown on line 5a.
Do not use Form 843 if your claim or request involves:
(a) an overpayment of income taxes or an employer’s claim for FICA tax, RRTA tax, or income tax withholding (use the
appropriate amended tax return),
(b) a refund of excise taxes based on the nontaxable use or sale of fuels, or
(c) an overpayment of excise taxes reported on Form(s) 11-C, 720, 730, or 2290.

Do you know which of the above situations applies to me? I was thinking it would have been part a) of "Use Form 843 if your claim or request involves:" but I am a bit confused as it says "(other than income taxes or an employer’s claim for FICA tax)" and it also says not to use Form 843 if my claim or request involves "an overpayment of income taxes or an employer’s claim for FICA tax".

Also, I understand that the federal tax credit or deduction will be applied when I file my taxes for the year 2022, but could I technically actually send the IRS Form 843 right now to get the FICA tax refunded, assuming I also get a statement from my former employer saying that they can't pay it back and I am owed a refund? Also, if my employer refuses to provide a statement as well, should I just submit Form 843 anyway?

Thank you so much!

[Carl]

You never get a refund for monies received that you paid taxes on in a prior year. Instead, you will be able to deduct it from your taxable income in the tax year you paid it back. TurboTax can handle this just fine.

[Mike9241]

under IRC sec 1341, if the repayment is for an amount taxed in a prior year and more than $3000, the options are a deduction - 1341)(a)(4) - or a credit computed by refiguring the tax for the year received excluding the amount of the repayment 1341(a)(5) 

https://www.law.cornell.edu/uscode/text/26/1341