@Dontax44 wrote:
Client received a sign on bonus in July 2017. Reported on his W-2 and income tax, social security and Medicare taxes were withheld from the bonus amount. The client left the employer shortly after being employed so that a significant portion of the bonus had to be repaid. As of November 2019 the bonus portion owing was fully repaid.
Do we ask the employer to issue a corrected W-2 (W-2C) for 2017 and amend the 2017 Form 1040 tax return?
Or do we report the payback amount on Schedule C for 2019?
If schedule C how does client recoup social security and Medicare taxes paid on full bonus amount?
Thanks.
You want to research, Claim of Right - IRC Section 1341.
Both of your ways are incorrect.
