Paying back a bonus

[Possi]

I have searched the forum, the TaxBook and the 'net, and I know I have seen this but now I can't put my fingers on it...

My client got a 30K sign on bonus that she will be paying back.

She received it in 2011, and it must go on her tax return.

She will pay it back in 2012, and I believe it goes on line 21 as a negative number... but now I wonder if it's line 35 as an adjustment??

This will happen on the 2012 tax return, of course.

[BP.]

I have searched the forum, the TaxBook and the 'net, and I know I have seen this but now I can't put my fingers on it...

My client got a 30K sign on bonus that she will be paying back.

She received it in 2011, and it must go on her tax return.

She will pay it back in 2012, and I believe it goes on line 21 as a negative number... but now I wonder if it's line 35 as an adjustment??

This will happen on the 2012 tax return, of course.

Have a look at pub 17, p 89-90 for your options.

[Possi]

Thanks!

Thanks~ I'll look at that. Don't know why it was so hard to find. Maybe I use the wrong key words...

I looked it up. Sure doesn't seem fair that they would have to take it as a misc itemized deduction on Sch A!


It went in as wages. They don't even itemize!

Argggggg

[VT-EA]

There is another way

http://www.irs.gov/publications/p525/ar02.html#en_US_2011_publink1000229600

[Gary2]

You'll need to do some serious research, both on how the repayment was structured and how the Code (specifically section 1341) has been analyzed by the courts and IRS. A $30K deduction is too large to not do due diligence.

[Possi]

Homework

Looks like I'll have some homework to do before this hits next year. At least she gave me the "head's up" on it.
I don't understand what I'm readiing where the tax credit is concerned, but I will. Thanks for the links and the material.
Like I said, this happens on the 2012 tax year return, so I'll put it to bed for now.