Repayment on sign on bonus in subsequent year

[taxquestion2016]

Hello,

I received a sign on bonus of $44000 minus taxes and with holdings in 2022 and repaid the gross amount back in 2023. My repayment was due to not satisfying the 2 year employment limit after receiving the sign on bonus. When I repaid the gross amount back in 2023, my employer advised that there will not be a corrected W2 for 2022 and suggested that I deduct the gross amount of 44000 in my 2023 taxes. However, my employer now sent me a corrected 2022 W2 in the year 2024, just as I was preparing to file my 2023 taxes. Kindly suggest what I would need to do now to recoup the 44000 that I paid back to my employer in 2023. 

As I received a corrected W2 for 2022, do I need to amend my 2022 taxes? If yes, will amending my 2022 taxes recoup the taxes that I paid back to my employer while paying the gross amount of $44000 back?

Thank you in advance for your patient review and answer .

[RobertB4444]

If the corrected W2 for 2022 shows $44000 less in income then yes - you should amend your 2022 return.  That solves your problem and will result in you receiving a refund of the taxes that you paid at that time.

If the corrected W2 does not show $44000 less in income then you can enter the amount that you repaid as a deduction in your 2023 return.  Go to the "Deductions and Credits" section and scroll all the way down to the last entry for "Miscellaneous Deductions"  Click start there and answer the questions until you get to "Did you repay more than $3000 that you were taxed on in a previous year?"  Answer yes and then enter the amount.

@taxquestion2016 

[taxquestion2016]

Hi Robert,

Thank you for taking the time to respond to my question. The corrected W2 shows the $44000 reduced from the gross. However, it also shows reduced federal, state, FICA withholdings. I received $44000 minus withholdings from my employer but I paid them back, the total gross amount of $44000. Are they allowed to reduce the withholdings on the corrected W2 as well? 

[AmyC]

You need to  file Form 843 for Medicare and Social Security taxes to be refunded, See Pub 525.  What employers should do is refund you the difference - you should ask since they changed the amount. By changing the amount, they are saying that is the amount they took rather than the actual value.

Amend your 2022 tax return for the wage difference.