Repaying Retention bonus

[questionsabouttaxes]

I received a retention bonus for $14K but $6K taxes were taken out when it was paid to me, so I only received around $8K. Now, I'm paying back the $14K total in the same year. How can I recoup the $6K in taxes? What documents should I fill out or get from my ex-employer? I know very little about different tax situations and documents so would love help on it. Thanks!

[Critter-3]

If you got the bonus and repaid it in the same tax year then this should be captured on the W-2 issued in January and the excess fed/state withholding will be recouped on the tax return. 

[Hal_Al]

As @Critter-3  said, it should all be handled by a correct issuance of your 2023 W-2, in January 2024.  Wait for the W-2.

If your employer does not handle the W-2 correctly, reply back for specific  instructions for your circumstances.  You may have to use a work around, in TurboTax. 

[questionsabouttaxes]

I was notified that Paychex flex doesn't give out W-2s for employees who didn't officially work at the company but received the post tax sign-on bonus and returned the pre-tax amount. I have no other documents from my employers other than the paystubs showing post-tax bonuses and my wire transfer confirmation of pretax amounts. What should I do? Thanks! 

[Hal_Al]

Wait a little longer. Despite being told you won't get a W-2, you may still get one.

If I understand this correctly: you only received $8K, but paid back $14K?  And  the paystubs show the withholding?

If you don't get a W-2, you'll prepare a substitute W-2, in TurboTax, as part of your tax return, to get the federal income tax  withholding refunded. Prior to doing that, you're supposed to make some effort to get a W-2 from your employer, including reporting them to the IRS. 

You'll have to file  a claim for  the FICA refund using Form 843, which is not supported, by TT and is not part of your income tax return. Again, prior to doing that, you're supposed to ask your employer to refund it to you (they request a refund from SSA).

[questionsabouttaxes]

The paystub shows the withholding (for medicare, social security, federal and state income taxes).  And yes, I received $8K approximately and paid back $14K.

Should I do both of the steps you mentioned or do I do one or the other depending on some circumstance?: 

1) Report employer to IRS (where can I do this?), file a W-2 substitute (also how should I do this? Is this another form on TT?)

2) File a claim for the FICA refund using Form 843 -- is this still part of the tax returns process & how can I use turbotax in addition to filing this refund? 

Thank you so much-- I'm so new to this and every bit of information is super helpful!

[Hal_Al]

Q. Should I do both of the steps you mentioned or do I do one or the other depending on some circumstance?

A. Both.

Q.  Report employer to IRS (where can I do this?)

A.  See full instructions below.  Note the requirement to wait til Feb. 15

Q. File a W-2 substitute (also how should I do this? Is this another form on TT?)

A. Yes. It's in the W-2 section

Q. File a claim for the FICA refund using Form 843 -- is this still part of the tax returns process & how can I use turbotax in addition to filing this refund? 

A. No. You can not get the FICA refunded, in this situation, as part of your standard tax filing.  It's a separate filing.  It cannot be done in TurboTax

If you haven’t received your W-2, follow these four steps:

1. Contact your employer If you have not received your W-2, contact your employer to inquire if and when the W-2 was mailed. If it was mailed, it may have been returned to the employer because of an incorrect or incomplete address. After contacting the employer, allow a reasonable amount of time for them to resend or to issue the W-2.

2. Contact the IRS If you do not receive your W-2 by February 15th, contact the IRS for assistance at 800-829-1040. When you call, you must provide your name, address, city and state, including zip code, Social Security number, phone number and have the following information:

• Employer’s name, address, city and state, including zip code and phone number

• Dates of employment

• An estimate of the wages you earned, the federal income tax withheld, and when you worked for that employer during 2023. The estimate should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible. 

3. File your return You still must file your tax return or request an extension to file April 15, 2024, even if you do not receive your Form W-2. If you have not received your Form W-2 by the due date, and have completed steps 1 and 2, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. Attach Form 4852 to the return, estimating income and withholding taxes as accurately as possible. Your final pay stub is the best source of info. There may be a delay in any refund due while the information is verified. 

4. File a Form 1040X if you later receive your missing W-2 after you filed your return using Form 4852, and the information may be different from what you reported on your return. If this happens, you must amend your return by filing a Form 1040X, Amended U.S. Individual Income Tax Return

Reference:
https://www.irs.gov/uac/missing-form-w2-irs-can-help

[questionsabouttaxes]

To clarify, this was the sign on bonus that I received before starting the job. I didn't end up taking the job so there were no dates of employment or paystubs other than the one that gave the sign-on bonus. Would W-2 still be the form I should ask from them? 

[ThomasM125]

If Paychex said they don't issue a W-2 form, that must mean that the taxes weren't paid in or if they were they were refunded to the employer. Otherwise, their payroll tax returns would not reconcile. If they paid in taxes for you, then they have to account for that on the year-end W-3 filing that summarizes the W-2 form wages and taxes withheld. So, I suspect the company has the taxes and if so they should refund them to you. You should ask the company what happened to the taxes that were withheld, if they were paid over to the government then they would have to be reported on a W-2 form or 1099 form issued to you.

[Hal_Al]

Q. Would W-2 still be the form I should ask from them? 

A. Yes.  Although other forms, e,g, 1099-NEC and 1099-Misc can show federal and state income tax withholding, only the W-2 (to my knowledge) shows FICA (social security and medicare) withholding. 

I like @ThomasM125 's suggestion: contact the employer, directly, for a refund.

[questionsabouttaxes]

Hi, the employer responded to my refund request and mentioned that:

1) they can't generate a W2 outside of Paychex Flex as Paychex is their payroll provider and solely responsible for all applicable W2's

2) They can only manage Employer tax, not Employee tax. Individuals are responsible for filing their annual tax return and obtaining any refunds not them.

Given there won't be a W-2 generated & no refunds made on the employer's part, is my only remaining option to contact the IRS after 2/15? 

[Mike9241]

Was the bonus and repayment in the same year? If yes the employer must correct the W-2 taxable wages to reflect the repayment.  If they won't or can't, yes, contact the IRS but the IRS says to wait until the end of February.

See this link from IRS for incorrect W-2

https://www.irs.gov/faqs/irs-procedures/w-2-additional-incorrect-lost-non-receipt-omitted 

If repayment occurred in a subsequent year and was over $3000 different tax rules apply. 

If this is your situation post back in this thread for what you should do.