Ask an AI Accountant

A free tool by

I received a bonus from my employer in 2021. I left the company in 2022 and they asked me to repay half the bonus, so I did. How can I claim the tax credit for the tax that I overpaid?
AI accountant’s answer:
Since the bonus repayment occurred in 2022, you'll need to address the repayment on your 2022 tax return. In general, when you repay a portion of a previously taxed bonus, you can claim a tax deduction or credit for the repaid amount, depending on the repayment's size. If the repaid amount is less than $3,000, you can claim it as a miscellaneous itemized deduction on Schedule A of your 2022 tax return. However, note that the deduction will be subject to the 2% adjusted gross income (AGI) limitation. This means that you can only deduct the portion of the repayment that exceeds 2% of your AGI. If the repaid amount is $3,000 or more, you can choose to either claim a miscellaneous itemized deduction (subject to the 2% AGI limitation) or reduce your taxable income in the year of repayment under the "claim of right" doctrine. To claim a credit under the "claim of right" doctrine, you will need to calculate the amount of tax you paid on the repaid income in the previous year (2021) and then claim it as a credit on your 2022 tax return by using Form 1040, Schedule 3, Line 12, with the credit's code "I." It's important to review your specific situation and consider consulting a tax professional to determine the best approach for reporting the repayment on your 2022 tax return.
Comment from reviewer
Jacques Seys, CPA

If the amount repaid was $3,000 or less, deduct it from income in the year repaid.  If the amount repaid was more than $3,000, deduct the repayment as an other itemized deduction on Schedule A (Form 1040), line 16, if the income was included under a claim of right.

Not Correct.
Icon check
Looks good

Keeper’s AI Accountant

This AI accountant is powered by GPT-4, but has up-to-date knowledge of tax law. It’s been trained on federal and state tax updates for 2023. With credentialed tax professionals fact-checking its responses, it applies IRS rules to real-world situations.

Estimate tax saving

Track and claim every eligible deduction with Keeper

Keeper is the top-rated all-in-one business expense tracker, tax filing service, and personal accountant.