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I received a $10k bonus in 2018. I switched jobs and had to pay it back in 2019. Since it was included as income on my 2018 W2, can I account for this loss in 2019?

Received a $10k bonus for a job in October 2018. In August 2019, I left that job for another Company and had to repay the $10k. Since it was included as income in 2018, how do I account for for this when filing my 2019 taxes? Is there any way to get a credit or deduction for it?
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Level 15

I received a $10k bonus in 2018. I switched jobs and had to pay it back in 2019. Since it was included as income on my 2018 W2, can I account for this loss in 2019?

Repayment over $3,000. If the amount you repaid was more than $3,000, you can deduct the repayment. However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. This means that at the time you included the income, it appeared that you had an unrestricted right to it. If you qualify for this choice, figure your tax under both methods and compare the results. Use the method (deduction or credit) that results in less tax.

See Repayments here:

https://www.irs.gov/pub/irs-prior/p525--2018.pdf

Level 15

I received a $10k bonus in 2018. I switched jobs and had to pay it back in 2019. Since it was included as income on my 2018 W2, can I account for this loss in 2019?

To report the repayment of taxable income as an itemized deduction on Schedule A -

  • Click on Federal Taxes (Personal using Home and Business)
  • Click on Deductions and Credits
  • Click on I'll choose what I work on (if shown)
  • Scroll down to Other Deductions and Credits
  • On Other Deductible Expenses, click on the start or update button

Or enter other deductions in the Search box located in the upper right of the program screen. Click on Jump to other deductions

 

If the repayment amount was $3,000 or less -

  • On the next screen, click on No (Generation Skipping Taxes)
  • On the next screen, click on Yes (Less Common Expenses)
  • On the next screen, enter the amount repaid. Continue with this section until it completes.

If the repayment amount was over $3,000 -

  • On the next screen, click on No (Generation Skipping Taxes)
  • On the next screen, click on No (Less Common Expenses)
  • On the next screen, click on Yes (Do You Have Any of These Other Expenses?)

Enter the amount repaid in the box labeled Claim of right repayment over $3,000. Continue with this section until it completes.