gross-up tax on the repayment of $40K

Forum|Forum|5 years ago
January 29, 2021
1 reply
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Two years ago, when I joined the company, I received 40K + gross-up tax on W2. The 40K was paid as the reimbursement of relocation expenses.

Now, due to job change, I repaid the total amount of $40K but no w2-c was provided.

How should I input this in Turbotax without w2-c? Does the gross-up tax portion belong to me?

thanks,

AmyC

Employee

1. You repaid more than $3,000 so you will do a tax credit. See how below.

2.The grossed up wages represent the additional FICA tax the employer paid and is not a concern for you, see legal comment.

Since you repaid more than $3,000, you claim a credit. These are the steps:

Figure your 2020 tax as normal, without deducting the repaid amount.
Locate prior year taxes that are now incorrect. Note the amount of tax liability.
1. Refigure your tax from the earlier year(s) subtracting the income that you have repaid.
2. Subtract the difference in tax liability for the year.
3. The difference is your 2020 credit allowed. This is your right of claim credit.
4. This becomes a credit on your return labelled as IRC 1341. This is schedule 3, line 12d.

Use the desktop program, the online version does not support this credit. If you are online, easy to switch.

If you are online user, and have not purchased your software, simply buy the desktop version and download your .tax file so you don't have to do your taxes again. Any trouble, call support, link below. Here are desktop options.
If you have paid for your online taxes, call support and tell them the desktop program is required.
Please use the following link for a customer support number.

Please see example and full details in my other post.

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juggerj21Author

Thanks for the reply. Much appreciated!

Can you please clarify what do you mean by "not a concern on the gross-up tax"?

If I don't do anything and only claim the repayment, the gross-up tax will show as withhold tax on my account. In this case, some portion of the gross-up tax will be refunded to me. I don't mind to have extra refund but would like to know if it is okay for me to keep. Or should I remove the gross-up tax portion on the amended return?

thanks.

ThomasM125

The gross up tax is the payroll tax and withholding that should have been done by the employer but was not. It is not taxable to you even though the employer paid it on your behalf, so you don't need to worry about it.

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