Bonus Repayment / Claim of Right - Less than $3K

[bbrownatl]

I have a young client who got a $2,500 bonus in 2020. Net after tax, he received approx. $1,870. He then left in 2021. The company issued a notice requesting full repayment given the requirement of staying one year on the job. On p.3-25 of TTB, it indicates:

"Repayment of $3,000 or less. Deduct the repayment on the form or schedule on which the income was previously reported (Schedule C, F, etc). If reported as a capital gain, deduct the repayment as a capital loss on Schedule D (Form 1040). If the income was reported as wages, unemployment, or other nonbusiness income, no deduction is allowed."

So, if the amount repaid was $3,000 or less, Claim of Right under IRC 1341 does not apply. I saw it noted elsewhere that "If it was reported as wages, taxable unemployment compensation, or other non-business ordinary income, it is deducted on Schedule A, Itemized Deductions." However, this is a young guy who does not itemize. Any other route?

Much thanks,
Brian

[TaxGuyBill]

Nope. Nothing to be done.

As a side note, I hope he did not repay the entire $2500. He does not need to repay the Social Security/Medicare tax withheld because the employer will be amending their 941 to get that back.