Repaid Sign on Bonus After 1 Year - W2C Issued with Box 16 Updated

[throwaway22334]

I joined a job in 2021 and received a $10000 sign on bonus. In 2022, I left that job for another one and was asked to repay the sign on bonus. My company refunded the SS and Medicare taxes, meaning I only had to pay $9235 back.

They then issued me a W2C with the updated information - specifically, boxes 3, 4, 5, 6 and 16 were updated (SS wages, SS taxes withheld, Medicare wages, Medicare taxes withheld and VA state wages).

I've read elsewhere that the company cannot legally update box 16 and that I would have to wait until next year to file for refund of the excess taxes paid (both federal and state). Is this correct or can I file an amended return using my W2C and get a partial refund on the state taxes?

[NCperson]

@throwaway22334  you can not amend the 2021 tax return as the repayment of the bonus occured in 2022 and hence has to be reported in 2022.   How to report this in 2022 is a little complex and let's wait for others to describe it 

[Mike9241]

I don't know VA law. hopefully, someone else will respond. if not call the Virginia Department of Taxation.  have them cite their code section 

for federal 

since the repayment was more than $3000 you have the following options for 2022 

1) take as a deduction on Schedule A line 16 denote as IRC 1341 repayment OR

2) recompute your taxes for 2021, the year you received the payment, by excluding the payment.

the decrease in taxes is taken as a credit in 2022 on schedule 3 line 12d denote as IRC 1341

[throwaway22334]

Appreciate the response. Based on the options you listed, there's no need to take action with the W2C for federal taxes, correct? Since my tax liability for the 2021 tax year hasn't changed and I need to wait until next year for the refund.

[NCperson]

@throwaway22334 that is correct 

[Mike9241]

for federal you have to wait for 2022. I looked at VA tax code but could find nothing specific. so call because to get back the VA income taxes you may need to amend 2021 not get credit on 2022.

[throwaway22334]

Thanks everyone for the help! Will call and try to get answers for VA taxes