Received a Relocation bonus of @$12K (untaxed) in 12/18 from the relocation company. We filed our tax return & paid the taxes on the bonus amount in 4/19.
If we cannot relocate within 12 mos., we are required to pay back the entire amount (or payment plan)
1. How do we determine the actual tax paid on the relocation bonus - we filed a 1040A (itemized)?
2. Forms to fill out to recoup the tax we paid this year?
3. Is there an advantage to paying off the entire amount or balance in 2019 or wait until 2020?
It's not clear if this will actually happen or you're just researching "what if" scenarios.
You do not need too calculate the exact and specific amount of tax paid on the $12K. There is a specific procedure for reporting repayments. It is reported on your 2019 tax return . There is an advantage to paying all at once, as there is no tax break for paying back less than $3000 in any one year. The calculation is also easier with a one time payment.
Repayments. This situation is described in IRS Publication 525. pgs 34-35. If the amount is more than $3000, you can take a itemized deduction, on line 16 of schedule A or you can take a credit. The credit is computed by refiguring the tax return from the previous year as if the income had not been received. Then the difference in tax is claimed as a credit on the current year's return. In the forms mode (the forms mode is not available in the on-line versions of TurboTax[TT]), you can use the line 74 smart work sheet to enter the credit amount on line 74; select item D, claim of right under IRC 1341 for repayments. TT will enter "I.R.C.1341" on the line next to box d on line 74 of form 1040 (schedule 5). TT does not do the credit calculation or compare it to the alternate deduction.
So, the taxpayer has the option of either claiming the credit or deducting the repayment as a miscellaneous itemized deduction, whichever provides the greater benefit. But, you cannot file an amended prior year return.
If the amount is $3,000 or less, no deduction or credit is allowed. In the past, a miscellaneous itemized deduction, subject to the 2% of AGI threshold, was allowed. But, all miscellaneous itemized deduction, subject to the 2% of AGI rule go away in 2018. I've seen nothing yet to indicate if there will be an exception for repayments of income
https://www.irs.gov/pub/irs-pdf/p525.pdf
Pub 17 https://www.irs.gov/publications/p17/ch12.html#en_US_2016_publink1000172015
It's not clear if this will actually happen or you're just researching "what if" scenarios.
You do not need too calculate the exact and specific amount of tax paid on the $12K. There is a specific procedure for reporting repayments. It is reported on your 2019 tax return . There is an advantage to paying all at once, as there is no tax break for paying back less than $3000 in any one year. The calculation is also easier with a one time payment.
Repayments. This situation is described in IRS Publication 525. pgs 34-35. If the amount is more than $3000, you can take a itemized deduction, on line 16 of schedule A or you can take a credit. The credit is computed by refiguring the tax return from the previous year as if the income had not been received. Then the difference in tax is claimed as a credit on the current year's return. In the forms mode (the forms mode is not available in the on-line versions of TurboTax[TT]), you can use the line 74 smart work sheet to enter the credit amount on line 74; select item D, claim of right under IRC 1341 for repayments. TT will enter "I.R.C.1341" on the line next to box d on line 74 of form 1040 (schedule 5). TT does not do the credit calculation or compare it to the alternate deduction.
So, the taxpayer has the option of either claiming the credit or deducting the repayment as a miscellaneous itemized deduction, whichever provides the greater benefit. But, you cannot file an amended prior year return.
If the amount is $3,000 or less, no deduction or credit is allowed. In the past, a miscellaneous itemized deduction, subject to the 2% of AGI threshold, was allowed. But, all miscellaneous itemized deduction, subject to the 2% of AGI rule go away in 2018. I've seen nothing yet to indicate if there will be an exception for repayments of income
https://www.irs.gov/pub/irs-pdf/p525.pdf
Pub 17 https://www.irs.gov/publications/p17/ch12.html#en_US_2016_publink1000172015