A
abraham13
Guest
What is the name of your state? Arizona.
When signing on with a company in July 2001, I received a bonus of $10,000. This bonus was taxed (I only got $5900+) and included in my income for 2001 (the $10,000 was included in wages earned on my W2). I agreed to stay with the company for 3 years for receiving this bonus. I decided to go back to school out of state and left the company in August of 2002. Since I only stayed with the company for 13 months, I had to repay the $10,000. So I received less than $6000 of the bonus in 2001, and paid back $10,000 in 2002.
I did some research on the IRS website (and other sites) and found that publication 525 of the IRS had information on repayment of income. It says that if the amount repaid is over $3000, there are two choices that can be used when doing your taxes-claiming a deduction or credit. To be eligible, the repayment had to qualify as an expense or loss incurred in your trade or business or in a for-profit transaction. To take a credit, you have to have had a claim of right (which means you had an unrestricted right to this income).
My question is: Does my situation fall under the requirements of this publication? And if so, if I use method 2 do I use both the resulting credit and the refigured tax (tax liability) when doing my taxes (publication 525 tells you how to figure out the credit and the refigured tax, but doesn’t really say if you include both when you do your taxes).
When signing on with a company in July 2001, I received a bonus of $10,000. This bonus was taxed (I only got $5900+) and included in my income for 2001 (the $10,000 was included in wages earned on my W2). I agreed to stay with the company for 3 years for receiving this bonus. I decided to go back to school out of state and left the company in August of 2002. Since I only stayed with the company for 13 months, I had to repay the $10,000. So I received less than $6000 of the bonus in 2001, and paid back $10,000 in 2002.
I did some research on the IRS website (and other sites) and found that publication 525 of the IRS had information on repayment of income. It says that if the amount repaid is over $3000, there are two choices that can be used when doing your taxes-claiming a deduction or credit. To be eligible, the repayment had to qualify as an expense or loss incurred in your trade or business or in a for-profit transaction. To take a credit, you have to have had a claim of right (which means you had an unrestricted right to this income).
My question is: Does my situation fall under the requirements of this publication? And if so, if I use method 2 do I use both the resulting credit and the refigured tax (tax liability) when doing my taxes (publication 525 tells you how to figure out the credit and the refigured tax, but doesn’t really say if you include both when you do your taxes).