My wife's employer helped us move by giving us $20,000 cash for moving expenses. This was on top of them paying for movers, and tax gross-up.
One stipulation was if she got another job within 2 years we would have to pay it back.
Well guess what!? She got a new job and we did pay back the $20,000. This all occured within 2006.

Here is the question: Her W-2 includes the $20,000. Since we had to pay this money back to her employer, can we reduce her income by that amount that was reported on the W-2, or are we out of luck?

You should ask your former employer for an amended W2. You did not receive $20,000 in income. You received a loan, which was repaid.

Hi damonk. Welcome to AnswerPool.

I think you should have your taxes professionally done this year. Ask your wife's current boss for the name of a good accountant.

If the employer won't ammend the taxes, be sure to ask if they are claiming the $20,000 you gave them as additional income. (They probably aren't). If they won't ammend the form then you will have to figure out how to claim the $20,000 as a loss. You aren't out of luck. You can always call the IRS for free. You did nothing wrong and they are much nicer than their reputation. They are very helpful whenever I call.


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I can't agree with Clare on this one. You don't need a good accountant at all. I do agree you can call the IRS, especially since Clare has kindly provided you with the numbers.

The issue is very straightforward. You did not receive 'income', you received a loan, which you repaid. Your wife's boss sounds really fair, so I'm sure you will get their full co-peration. But you might need to talk to someone other than the payroll clerk. The payroll clerk may not know that you repaid the loan. This sort of mix-up happens often in small companies. The repayment check comes in, the person doing the bank deposit doesn't know it was treated as earnings/bonus on your wife's W2, and posts it to 'miscellaneous income' to the company or some such. Actually it should have been posted as a credit to payroll expense, if the original loan was posted there; or to 'loans receivable' or wherever it was posted.

This is particularly likely if it was not booked as a loan when they wrote your wife the check. They perhaps didn't expect it would be repaid and probably booked it as an employee benefit.

Even if the company won't replace the W2, a letter to the IRS explaining IN FULL what happened, and including a photocopy front-n-back of the repayment cheque, should do the trick.

Best, though, is to get a revised W2.