Return of sign-in bonus

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  • sami
    Member
    • Apr 2017
    • 78

    #1

    Return of sign-in bonus

    I have a new client who received a sign-in bonus from his new job in 2021 in the amount of $18,000 on his W2 and his employment contract stated that if he leaves before one year he will have to pay back $3600. My client left the job in 2021 and paid his employer $3600 via bank transfer as that was the only means mentioned in his contract. I understand he will not be able to get the FICA paid on it but is their a way to claim $3600 return of bonus on 1040 as the entire amount was originally reported as wages?
  • New York Enrolled Agent
    Senior Member
    • Nov 2006
    • 1530

    #2
    Originally posted by sami
    I have a new client who received a sign-in bonus from his new job in 2021 in the amount of $18,000 on his W2 and his employment contract stated that if he leaves before one year he will have to pay back $3600. My client left the job in 2021 and paid his employer $3600 via bank transfer as that was the only means mentioned in his contract. I understand he will not be able to get the FICA paid on it but is their a way to claim $3600 return of bonus on 1040 as the entire amount was originally reported as wages?
    There is a good content on the treatment of a repayment on page 36 of Pub 525. Two options spelled out.

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