hiring bonus repayment

Forum|Forum|4 years ago
February 1, 2022
2 replies
21 views

Hello,

I joined the company in 2020 and I got hiring bonus >$10k after tax.

Due to covid, our family decided to stay where we were and I had to leave the company in 2021.

In August 2021, I had to repay the hiring bonus.

What is the best way to get the deduction or credit in my case?

Thank you,

(Summary)

Joined a company with hiring bonus ($>10k after tax) in 2020.
Left the company with repaying the hiring bonus in 2021.
What is the best way to handle this? Will "Premier" be the best version in Turbotax?

Not A Product Question

LenaH

Alumni - Expert

In your situation, you could use a "claim of right" Section 1341 credit since the repayment was more than $3,000. This is a federal tax credit for taxpayers who reported income in the previous year, but have to repay the income. The Section 1341 credit is found on your 1040, Schedule 3. If you repay them in a later tax year, you can deduct the repayment as an itemized deduction on your Schedule A (Form 1040), Other Itemized Deductions.

For the method on how to calculate your amounts for Schedule 3, please see Publication 525 and go to page 36.

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