repayment of bonus, box 1 not changed in w2c

[ps42]

Hello,

I received sign-on bonus in 2023 when I joined some company. As I left that employer before one year, I returned a partial amount of bonus in Oct. 2024. I got a corrected W2 (W2c) from the employer with only boxes 3, 4, 5 and 6 updated. I got refund for extra medicare/ss tax from the employer. Now, when I use TT desktop to amend return for 2023, as box 1 is not changed, TT shows an additional tax liability for federal tax. How's that possible?

In addition, I have few other questions:

a) Is amending 2023 is the right thing to OR should I claim a credit on 2024 return under IRC 1341?

b) As box 1 is not updated in W2c, is it a mistake from employer and I should seek revised W2c with box 1 updated?

c) If amending return is advised, can I just amend the return with revised figures for box 1 on my own even though W2c from employer doesn't revise that?

d) Can I assume the same revised figures (i.e. W2 wages - returned bonus amount) for state wages as well even though W2c doesn't have any box updated for state?

Would appreciate your responses. Thanks.

[Mike9241]

since repayment was in a different year you do not amend 2023. if the gross wages repaid was $3,000 or more you could take a deduction on the 2024 schedule A line 16 denoted as IRC 1341 repayment OR
recompute the taxes for 2023 by excluding the wages repaid from income. The decrease in taxes is taken as a credit on your 2024 schedule 3 line 13b

if the repayment was not net of the applicable FICA and Medicare taxes you need to file form 843 to get them refunded. see the instructions for line 7

https://www.irs.gov/forms-pubs/about-form-843 

What about amounts less than $3,000?
Beginning in 2018 with the Tax Cuts And Jobs Act, miscellaneous deductions are no longer permitted. So if the amount repaid was $3,000 or less, you are not able to deduct it from your income in the year it was repaid.

[ps42]

Thanks for your response. So, basically I can take the deductions while filing my 2024 taxes. BTW, the amount repaid was 7k.

Can you please advise how the deductions will be taken of for California state taxes? Thanks.