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JHH · Feb 3, 2007, 06:40 PM

I had sign-on bonus $5000 received ($3500 after tax) in 2005 and I left my job in 2006 that I repaid $2370 back to the company. According to IRS Pub. 525, I should be able to claim the repayment back. The following stated repayment clause:

Repayments
If you had to repay an amount (less than $3000) that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it.

My question is: how do I deduct the amount from my income?

If I follow the publication to enter $2370 on line 22 (form 1040), I can only get about $50 back (subject to 2% limit) where I paid more than $600 between the difference.

What should be the proper way to deduct the repayment? Should the company issue me W-2C instead of W-2 for year 2006?

Many thanks,
JHH

AtlantaTaxExpert · Feb 3, 2007, 11:32 PM

JHH:

You put the $2,370 on Line #21 as a negative figure.

There is no 2% limitation that I know of.

JHH · Feb 4, 2007, 11:08 PM

Thanks, AtlantaTaxExpert.

The number seems to be reasonable after putting negative figure on line 21. Do I need to provide any document while filing return? According to the company's email back in 2006that they will file 2005 W2-C. Should I amend 2005 or can I still put negative figure on line 21?

Thanks,
JHH

AtlantaTaxExpert · Feb 5, 2007, 10:15 AM

If they give you're a W-2C for 2005, then you need to amend your 2005 tax return.

JHH · Feb 5, 2007, 12:04 PM

Originally Posted by AtlantaTaxExpert

If they give your a W-2C for 2005, then you need to amend your 2005 tax return.

Thanks,
JHH

AtlantaTaxExpert · Feb 5, 2007, 11:21 PM

Glad to help!