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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I received a signing bonus in 2007 that was my sole income

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I received a signing bonus in 2007 that was my sole income for that year as I was a student. I decided to take a different job and now the bonus is a loan I am currently paying back to the original employer. Can I file a amendment to my 2007 return and receive a full refund of tax paid or do I claim some sort of credit on my 2008 return for amount paid?
Hello antho,

What was the amount of the signing bonus you received?
Customer: replied 8 years ago.

I received 25K but when it converted to a loan Wal greens claimed a portion back from the government that went to medicare and SSI, so my repayment obligation is 23K give or take a few bucks



You do not file an amended return for 2007. You can take a credit in the year you repay the bonus. If the amount was more than $3,000, you may use one of two methods to take the credit.

Method 1: You may claim a deduction on Schedule A line 28 as a misc. deduction. Deductions in this category are limited to those which exceed 2% of your AGI.

Method 2: Figure your tax for 2008 claiming a credit for the repaid amount. Follow these steps.

Figure your tax for 2008 without deducting the repaid amount.

Refigure your tax from the earlier year without including in income the amount you repaid in 2008.

Subtract the tax in (2) from the tax shown on your return for the earlier year. This is the credit.

Subtract the answer in (3) from the tax for 2008 figured without the deduction (Step 1).

An example of this computation can be found in IRS Publication 525. Please refer to the following IRS publication for details - Refer to section entitled "Repayments"

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