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emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2189
Experience:  IRS licensed Enrolled Agent and tax instructor
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I just had a question regarding my taxes, I made $45K last

Customer Question

Hi my name is***** just had a question regarding my taxes
JA: Thanks. Can you give me any more details about your issue?
Customer: I made $45K last year, but when I left my company I had to pay back $20K in termination fee back to my employer As a result I took out a loan, which requires me to back back $609 a month for 36 months and essentially I made $25K last year, considering the amount I paid back to my ex-employer I was wondering how I should file my taxes in this case
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Submitted: 7 months ago.
Category: Tax
Expert:  emc011075 replied 7 months ago.

Hi. My name is ***** ***** I will be happy to help out.

When did you repaid it back to your employer? in 2015 or 2016?

Customer: replied 7 months ago.
Hi, thank you for responding back to my question.
I paid the termination fee in October 2015 when I left the company.
Expert:  emc011075 replied 7 months ago.

If you repaid it last year than you should request a corrected W2. If the employer will not issue you a corrected W2, you can claim the repayment as a deduction or a credit on Schedule A. You will have to figure it out both ways to see which one will give you better refund or lower balance.

Expert:  emc011075 replied 7 months ago.

Here are instructions how to do it:

Expert:  emc011075 replied 7 months ago.

Regarding the loan, you cannot deduct the payments and because it is personal, you cannot deduct the interest either.

Customer: replied 7 months ago.
But is a contract termination fee considered a repayment deduction?
Expert:  emc011075 replied 7 months ago.

You received W2, correct? What it said in your contract?

Expert:  emc011075 replied 7 months ago.

Employer is required to pay you for your time or work done. If you received advances (or higher pay) as a condition that you must stay with your employer for a certain period of time and your employment is terminated early, your termination fee is basically repayment of those advances.

Expert:  emc011075 replied 7 months ago.

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