Hello!
I recently left my company that provided a relocation package. I left the company and paid back the relocation package in full....this all happened in 2010. My W2 shows my income as my salary plus relocation package..it does not show that I paid this money back. What do I do? Do I deduct the relocation packaage? Do I ask for a corrected W2? I am not sure what the law is here.
Thank you for any suggestions you may have.
Seems to me there are two ways to treat this. One way is that they paid it to you and it belonged to you. In that case you recognize tax in the year received, and get a deduction in the year paid back.
However my guess is that you paid it back because you had a contract requiring you to do so if you left the company within a certain period of time. In that case the payment is more along the lines of a loan, which isn't taxed. If they'll give you an amended 1099, that would be the easiest thing for you.
Repayment in the same year: You should get a corrected W-2. If not, follow the procedure for disputing a W-2.
Repayment in the following year: See "Claim of Right." That will result in either a deduction or credit (if over $3k), whichever produces the larger tax benefit. If under $3k, only the deduction is permitted. When over $3k, you may elect either but not both options.
Have something to add? Share your thoughts — no account required.
Ask the community — no account required