How to deal with company who keeps asking for return of sign-on bonus went to tax

[sfprob]

I accepted a $26000 sign-on bonus from a company on March, 2000. I only received about 12900 after tax. After I work for 6 weeks, my son has become very ill. I had to leave the job and stay home with my son. The company asked me to return the sign-on bonus. I returned the 12900 in full. But at the end of the year, my w-2 only reflected my salary but no indication of the sign on bonus as my income. I thought the company had made adjustment since I pay back the amount I actually received. Just few days ago, I received another letter form the company asking for the money that went to the tax (about $13000+). Since there was no 1099 issued to me from the company nor any indication of income from my w-2. I feel they are asking for something I just simply can not get it. Not only I had to pay taxes last year, but also not having a way to get the $13000 back since no indication from my w-2. I am afraid the company might take any legal action against me. I feel it is so unfair since I never had a way to get the money which went to the goverment. What is also confusing to me is that my w-2 had no indication of the sign-on bonus as my income. I am currently unemployee and have no money for a lawer. Can you kindly help me with this? What is my right at this point? Thanks SFJ

 

[loku]

Return of bonus

If the company actually did send in the $13,000 as tax withholding, they should have listed it as wages and as withholding on your W-2. What I suggest you do is tell the company that either they did not send in the money as withholding or they erred in not including it as income and as amounts withheld on your W-2. Tell them that if they actually did send the money in as withholding, they should issue you a revised W-2. If they do that, then you can file amended returns, showing the added income and withholding and requesting a refund of the excess withholding.

This gets a little complicated now. Because there will be tax on the $13,000, you will not get a refund of the entire amount; however, you will get a current deduction for the amount you return to the company, and you should come out even eventually on this.

If they did not send in the $13,000, then you owe them nothing.