Repayment of w-2 wages in 2013

[hac42]

I have only encountered this one other time a couple of years ago and just need a reminder...

Am I correct in entering a Repayment of w-2 wages on sch A Line 28? I don't have the information from the 2012 tax return. The TP said his wife was overpaid $18,560 and that they paid back the wages. I do have a letter "Certificate for Income Tax Adjustment"

[ddoshan]

I have only encountered this one other time a couple of years ago and just need a reminder...

Am I correct in entering a Repayment of w-2 wages on sch A Line 28? I don't have the information from the 2012 tax return. The TP said his wife was overpaid $18,560 and that they paid back the wages. I do have a letter "Certificate for Income Tax Adjustment"

Without looking it up to be sure ... I think you have a choice to take an itemized deduction or a credit. Basically would have to fill out the return both ways to see which way is best for the client. Believe the 2012 return is refigured to come up with a credit amount. At least that is the way it works with other repayments over 3000 dollars.

[ruthes]

Repayment of w-2 income

Look in the tax book 3-23. I looked it up because I have never had a client with this problem. Their answer is very good.

[Roland Slugg]

Yes, if the repayment is deducted on your client's 2013 return, the amount goes on Schedule A, line 28. This is a "Miscellaneous Itemized Deduction" not subject to the 2% haircut. However, since the amount is more than $3,000, your client can instead recover the tax paid on the repaid amount in the earlier year (2012?) if that produces a better result. This will be the case if the taxpayer was in a higher tax bracket in the earlier year than he is in the repayment year.

If the latter method is chosen, a quick refund can be applied for by filing F-1045. In addition to consulting TTB you can also read more about this in IRS Pub 525. Look up "claim of right."

In response to another reply above, there is no option to receive a credit in a case such as this.

[ddoshan]

In response to another reply above, there is no option to receive a credit in a case such as this.

Don't the instructions mention taking a credit against taxes as one of the options under claim of right.

[hac42]

Thanks for the responses~

[taxea]

Pub says you if you have a statement of the indicating the amount overcollected in SS and Medicare tax you can file F 843. Other options are use the statement to file an amended return for the year the taxes were withheld or ask employer to reimburse you