Repaying signing bonus

[kindabored23]

I'm new to TurboTax and was hoping for some insight on bonus repayment. I joined a company in 2020 and received a signing bonus but when I left I had to return the bonus. It was over $3000. They asked me to return the net bonus, which was still over $3000. When I returned the bonus in 2021 they corrected my W2 and didn’t change the wage box, which I've read is normal since it was repaid in the following year. My income for 2020 includes the gross bonus, so I ended up overpaying on my taxes. They told me I would be able to claim a credit when filing 2021 taxes. The company and I are both based in NYC. Would I be able to use the section 1341 claim of right option for this? 

[MinhT1]

Yes, that will be a section 1341 claim of right repayment.

If the repayment is more than $3,000, please read this TurboTax Help topic on how to make the claim.

[kindabored23]

Thanks for confirming. The article you linked mentions "You can manually calculate the amount, or you can use TurboTax CD/Download to calculate it for you. Make sure you use the same version of TurboTax that you used when you paid the taxes."  If I haven't used TurboTax before, would I still be able to do this? @MinhT1 

[ThomasM125]

You can still take the credit by recalculating your tax in the previous year even if you didn't use TurboTax. However, you would need to do the calculation manually, or by using the software you used to prepare the original tax return. Also, you could re-prepare the tax return in TurboTax to determine the credit instead of using the other tax product.

[kindabored23]

Thanks. How would I go about re-preparing the tax return in Turbo tax? Probably would want to do it that way to make it simpler @ThomasM125 

[ThomasM125]

You would need to purchase the TurboTax 2020 tax preparation download and follow the instructions to prepare your return. When you are done, subtract the refund or amount due from what was on your original return, and that is the credit amount to report on your 2021 return.

Here is a link to the TurboTax 2020 tax return product:

TurboTax prior year products

[Ashley2867]

Received $5000 sign on bonus in 2019.  Had to pay it back in middle of 2020.  How or where do I enter the tax credit on my 2021 taxes when I manually figure the tax difference?  

[Vanessa A]

You cannot take a credit in 2021 for something you paid back in 2020.  You would need to Amend Your Return for 2020 to reduce your income by the $5,000. 

When you go to Amend your 2020 return, you will take the following steps to reduce the income by $5,000.

• Federal
• Income and Expenses
• Scroll down to Less Common Income and click Show More
• Start next to Miscellaneous Income
• Start next to Other Reportable Income
• enter description as repayment of 2019 bonus in 2020 then for amount enter -$5,000