Yes, there is a credit or deduction for the repayment of your sign-on bonus for the amount you repaid during 2016. However, if the bonus was both received and repaid during the year, you should contact your former employer to correct your W-2.
Since your repayment was more than $3,000, there are two possible ways of doing the calculation.
Method 1 is to take a deduction, which is the simplest method but may not get you the full benefit.
To calculate the repayment as a deduction, (Method 1):
- Federal taxes - Deductions & Credits - Check for More Tax Breaks - Other Deductions & Credits - Show more - Other Deductible Expenses
- When you get to the screen that shows Less Common Expenses, click No
- The next screen will have Any Other Deductions? at the top. Please answer YES to "Did you have any other deductions that are not subject to the 2% limitation?"
- Please enter the amount you repaid under, "Claim of Right Repayment (Only if over $3,000).
NOTE: If you choose to follow the more complex route and use the credit:
For repayments of less than $3,000:
- Federal taxes - Deductions & Credits - Check for More Tax Breaks - Other Deductions & Credits - Show more - Other Deductible Expenses
- When you get to the screen that shows Less Common Expenses, click Yes
- Enter a description and amount that you repaid; click Continue
[edited 1/18/17 at 8:37 am]
