3 ms·

Not a tax guy, but I believe there is a procedure with the IRS for reducing the income on a prior tax return in the event of a clawed-back bonus. I left a comp

by saryant 11y ago

Not a tax guy, but I believe there is a procedure with the IRS for reducing the income on a prior tax return in the event of a clawed-back bonus. I left a company within six months once and they sent me paperwork about that to forward to the IRS. Though I refused to pay back the bonus and left that paperwork in a drawer... Several years later and I still get an annual nastygram demanding I pay them back.

rdtsc 11y ago
> I believe there is a procedure with the IRS for reducing the income on a prior tax return in the event of a clawed-back bonus. Pretty interesting. I had no idea this was a common enough thing for IRS to have a special exception for. I looked it up and there is thing called "Claim of Right" aka "Section 1341" in the IRS code. But involves the tax payer to not have an actual "right to" the income in the year the income happened. Which in this case it seems like they did have (in other words the bonus paid in that year wasn't an accounting mistake of some sort). But then maybe the employment contract applies retroactively and it turns out the employee now didn't have the right...