If the bonus and the repayment occur in the same year, the employer must adjust your W-2, there is no remedy on your tax return.
If the bonus was paid in a previous year and you already paid tax on it, but the repayment is less than $3000, there are no tax remedies on your tax return. You would have to see if your employer would deduct it from your current pay and adjust your W-2 accordingly.
If the repayment was more than $3000, then the following happens:
1. On your federal return, you can take a special itemized deduction or take a Claim of Right credit.
The itemized deduction is not subject to any limitations, but you must already itemize your other deductions (state and local taxes, mortgage interest and so on) for this deduction to get you full benefit.
The claim of right tax credit is a special tax credit in the amount of excess taxes from the prior year. You have to figure out on your own what your taxes would have been in the year the bonus was paid without the bonus, and the difference is the amount of the credit. You enter the credit manually on your tax return for the year you made the payment, you need Turbotax installed on your own computer to do this, you can't do it online. We can tell you where to enter this when the time comes.
2. For your state tax return, you will have to investigate on your own what their rules are, there is probably a claim of right credit or a deduction.
3. For your social security and medicare taxes, the employer could refund those to you and give you a corrected W-2 for the year you paid the bonus. If the employer will not refund the social security and medicare taxes, you will need to file form 843. This is a separate form, not part of your income tax return and not supported by Turbotax. You will need proof of the wage repayment, and you will need a letter from the employer stating they will not be refunding the now-excess social security and medicare taxes.
Note that for the claim of right credit, you must have had a reasonable belief at the time the bonus was paid, that you had an unrestricted right to the money. I have seen it argued that if this bonus was contingent on you working a certain number of years, then you knew you did not have an unrestricted right to the money. I can't judge the validity of the argument, and the only tax court cases I could find on the claim of right involved large corporations. If you don't use the claim of right, you can still use the special itemized deduction instead. Whichever you choose, be sure to keep your records for 6 years after filing your tax return.
From your example of $40 tax on $100 bonus, $7.50 is social security and medicare tax which you get back with form 843, $22 is federal income tax which you would take as a claim of right tax credit, and $10 or so would be state income tax which you can probably get back, although I don't know the rules for the different states.
