tax credit using signing bonus taken back


A

Arvind

I just changed jobs. When I left my job, I was asked to pay back my
entire signing bonus and relocation bonus they paid me last year.

Can I use this amount as a loss to reduce my taxable income when my
file my taxes next year? If yes, I'd really appreciate it if you
could tell me how?

Thanks,
Arvind
 
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R

removeps-groups

I just changed jobs. When I left my job, I was asked to pay back my
entire signing bonus and relocation bonus they paid me last year.

Can I use this amount as a loss to reduce my taxable income when my
file my taxes next year? If yes, I'd really appreciate it if you
could tell me how?
Yes. See Repayments in publication 525.

http://www.irs.gov/publications/p525/ar02.html#d0e9279

If you owe less than 3k, then you have to deduct it on Schedule A.
One paragraph in the above URL says "enter it on Schedule A (Form
1040), line 23" (which is subject to the 2% of AGI limit as well as
AMT), and a later paragraph says "enter it on Schedule A (Form 1040),
line 28". Is this a typo in publication 525?

It seems to me that the repayment should go in Other Income as a
negative number when your standard deduction without the deduction for
the repaid amount is larger than your itemized deduction, because if
you put it on Schedule A you may no (or only a partial benefit) from
deducting in on line 28 of Schedule A. The publication does not say
that you can do this, but maybe they're wrong because it discriminates
against lower income taxpayers.

If you owe more than 3k, you can either deduct or take a credit. The
credit equals to the difference between what the prior year tax was
originally or would have been were it not for the bonus. This way
seems fair and straightforward. According to the publication, the
credit goes on line 70.

However, there is the issue of social security and medicare tax. If
you got 10k, they may have withheld 7.65% or $765. Provided you did
not claim a credit for excess social security tax paid (line 67) in
the prior year, you should get all of this $765 back. The IRS
publication also does not say that you can do this, but it seems
reasonable to me and I imagine the amount would go on line 70.
 
C

Condor

I just changed jobs. When I left my job, I was asked to pay back my
entire signing bonus and relocation bonus they paid me last year.

Can I use this amount as a loss to reduce my taxable income when my
file my taxes next year? If yes, I'd really appreciate it if you
could tell me how?
See Repayments starting on page 33 of Publication 525.

http://www.irs.gov/pub/irs-pdf/p525.pdf


Condor
 
P

Phil Marti

Arvind said:
I just changed jobs. When I left my job, I was asked to pay back my
entire signing bonus and relocation bonus they paid me last year.

Can I use this amount as a loss to reduce my taxable income when my
file my taxes next year? If yes, I'd really appreciate it if you
could tell me how?
Yes. See "Repayments" on page 33 of IRS Publication 525.
 
A

Arthur Kamlet

Yes. See Repayments in publication 525.

http://www.irs.gov/publications/p525/ar02.html#d0e9279

If you owe less than 3k, then you have to deduct it on Schedule A.
One paragraph in the above URL says "enter it on Schedule A (Form
1040), line 23" (which is subject to the 2% of AGI limit as well as
AMT), and a later paragraph says "enter it on Schedule A (Form 1040),
line 28". Is this a typo in publication 525?
No. The line 28 statement is in a section for repayments over 3000.

Line 23 is for repayemnts less than 3000.
 
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R

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No. The line 28 statement is in a section for repayments over 3000.

Line 23 is for repayemnts less than 3000.
What's the reason for the different rules. It seems the rules are
unfair to those with lower incomes.
 

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