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How do I use a IRC 1341 credit on New York State tax?

Short version: In 2021, I had to repay my employer part of my sign-on bonus that I was granted in 2020. As a result I overpaid my NY state taxes for the tax year of 2020. I have been told I need to claim a "IRC 1341 credit" when I file the taxes for 2021, in 2022. If so, how do I adjust my NY state taxes? Do I need Turbo Tax Desktop for this or will Turbo Tax Online do it for me? Or is this too complicated that it warrants a in-person CPA help?

 

Details:

  • I joined a company in July 2020 and got a sign-on bonus, at the time of joining.
  • I left the company in March 2021, before a year was up. Upon my departure, as part of the sign-on bonus agreement, I was asked by the company to pay back part of the sign-on bonus.
  • I repaid the bonus clawback in Jun 2021. I am not sure if I will get an adjusted W2 from the company or not.
  • I have already filed my taxes for year 2020, but haven't gotten the refund yet because of IRS delays

 

2 Replies

How do I use a IRC 1341 credit on New York State tax?

Short version: In 2021, I had to repay my employer part of my sign-on bonus that I was granted in 2020. As a result I overpaid my NY state taxes for the tax year of 2020. I have been told I need to claim a "IRC 1341 credit" when I file the taxes for 2021, in 2022. If so, how do I adjust my NY state taxes? Do I need Turbo Tax Desktop for this or will Turbo Tax Online do it for me? Or is this too complicated that it warrants a in-person CPA help?

  •  in Jun 2021. I am not sure if I will get an adjusted W2 from the company or not.
  • I have already filed my taxes for year 2020, but haven't gotten the refund yet because of IRS delays

you will not get a corrected W-2 because you did not make the repayment in 2020.

how much did you repay? if $3,000 or less there is no deduction or credit available. if more than $3,000, then in 2021 when you made the repayment,  you can take as a deduction on schedule A line 16 denote as IRC 1341 repayment

OR
recompute the taxes in 2020 by excluding the amount of repaid wages  from line 1 of the w-2 

the decrease in taxes is taken as a credit on schedule 3 line 12d denote as IRC 1341 on your 2021 return.

 

 

see this link for instructions on computing credit

https://ttlc.intuit.com/community/unemployment-taxes/help/what-is-a-claim-of-right-repayment/00/2153... 

 

 

How do I use a IRC 1341 credit on New York State tax?

Thanks for the answer - you clarified a lot of my questions. Yes it is more than $3000. My question was specific to NY state taxes. Will the instructions you pointed me to cover both federal and NY state specific taxes? Would the CD I buy need to be of a specific type for NY? I have only ever used the online version.

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