Ask an AI Accountant

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.