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I was sent an amended w2, which I had to use to file an amended return
Very helpful. Thanks.
Coach
That’s probably a question for a CPA, but it’s an interesting one.
We did a thought experiment on this in my tax class in law school. You shouldn’t have claimed the bonus as income until it had vested, basically.
Mentor
I think A2 is assuming the clawback occurred the same year, in which case the employer should provide a corrected w2 (and you use that instead and don’t subtract anything on your own). If it wasn’t the same year, A2’s advice seems problematic.
Coach
Amend return.
But also, that clawback ain’t necessarily automatic.
Coach
Yup. That’s any commercial dispute. Just because a contract says “XYZ must happen”, don’t mean it does.
Mentor
I believe you file an amended return and get the refund based on that.
Mentor
Nope, that is wrong. Apparently you have to treat it as a deduction or section 1341 credit in the later year (assuming the clawback was not the same year as the bonus being paid). This seems like a good reason to use a CPA at least for that year.