Relocation lump sum repayment: W-2c issued but no additional tax refund showing?

What you're dealing with is a bit complicated but I can help clarify. The W-2c corrections for Boxes 3, 4, 5, and 6 are related to FICA taxes (Social Security and Medicare). These are separate from your federal income tax situation. For your questions: 1. Yes, typically Box 1 should also be reduced if you're repaying wages that were previously taxed as income. The fact that only Boxes 3 and 5 were adjusted suggests they might be handling the income tax portion differently. 2. Since your repayment is over $3,000, you have two options: take an itemized deduction on Schedule A, or use the claim of right provision (Section 1341) which might give you a better result. The W-2c adjustments alone won't fully address the income tax impact of your repayment. 3. You should probably expect some kind of refund since you repaid previously taxed income. The amount depends on your tax bracket and which method you use to claim the repayment. I'd recommend contacting your former employer's payroll department to ask why Box 1 wasn't adjusted on the W-2c. They might have a specific reason or it could be an oversight.

After dealing with a similar relocation repayment nightmare last year, I found an amazing service that saved me thousands! I used https://taxr.ai to analyze my W-2c and all the repayment documents when my tax software wasn't showing the refund I thought I deserved. They actually specialize in these complex tax situations where normal tax prep software falls short. Their system analyzed my W-2c and immediately flagged that my employer had missed adjusting Box 1, which was the exact issue you're having. They guided me through how to handle the claim of right provision correctly since my repayment was over $3,000 like yours. I ended up getting back almost $1,800 that I would have missed otherwise!

I was initially skeptical about using taxr.ai when I commented earlier, but I decided to give it a try with my own W-2c issues from a signing bonus repayment. I'm actually really impressed with how it worked! The system flagged exactly where my employer had made errors on the correction form and gave me step-by-step instructions for filing correctly. They explained that with repayments over $3,000, you likely benefit more from using Section 1341 claim of right rather than just an itemized deduction, which I wouldn't have known otherwise. I was able to take their guidance back to my tax preparer who corrected everything, and I'm getting an additional $2,100 refund that would have been completely missed. Definitely worth checking out if you're dealing with W-2c corrections or repayments.

I went through something similar with a relocation repayment last year, and the W-2c issue was just the beginning of my headache. After weeks of getting nowhere with my former employer's payroll department, I finally needed to speak directly with IRS specialists. I found https://claimyr.com which helped me skip the ridiculous hold times when calling the IRS. You can see how it works here: https://youtu.be/_kiP6q8DX5c - basically they wait on hold with the IRS and call you when an agent picks up. The IRS agent I spoke with immediately identified that my W-2c was processed incorrectly and gave me specific instructions for my employer's payroll team. Without that guidance from an actual IRS agent, I would have just accepted the incorrect W-2c and lost nearly $1,300 in refunds I was entitled to receive.

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it myself since I've been trying to reach the IRS about a similar issue for weeks. The service worked exactly as described - I put in my number, they called me back about 2.5 hours later with an actual IRS agent on the line. The agent confirmed that my employer's W-2c should indeed have included a Box 1 adjustment for my repayment. She gave me specific guidance on how to file Form 8275 to explain the discrepancy if my employer refused to issue a corrected W-2c. Without this conversation, I would have continued filing incorrectly. I'm now expecting an additional refund of around $900 once I submit the corrected information. Really glad I decided to give this a try despite my initial skepticism.

Not sure if this helps, but I went through something similar with a sign-on bonus repayment. My W-2c also only had adjustments to boxes 3, 4, 5, and 6. I called my former employer and learned that for federal income tax purposes, they were treating my repayment as a miscellaneous itemized deduction that I would need to claim on my own, rather than adjusting Box 1. The reasoning they gave was that since the repayment happened in a different tax year from when I received the payment, they couldn't simply adjust Box 1. Instead, I had to handle it as either an itemized deduction or through the claim of right provision depending on the amount.

Pro tip: Always check both methods (itemized deduction vs claim of right) before filing. The "Claim of Right" method usually works better for larger repayments because it essentially gives you credit at your original tax rate rather than your current one. I'm a tax preparer and see this relocation/bonus repayment issue all the time. Most tax software doesn't handle it well automatically. In FreeTaxUSA, you'll need to manually work through the Section 1341 calculations. Look in the Deductions section for "Repayment of Income" or similar wording.