[mreid]

I just went through this very situation (clawback) in 2013.

My situation: paid 2012 performance bonus to executives on December 28 for tax purposes with clawback provision if executive leaves prior to March 15, 2013 (normal date of performance bonus payment). I left February 2013. To simplify, I was paid $100 gross, $60 after taxes. When I left the company asked for their $100 back. I should only pay the $60, they collect the tax paid back from the government, and I deduct $100 from W2 earnings. Crossing the tax years made this more confusing.

In your case, the government has taxed you on the gross amount. You need to deduct that amount from your W2 earnings and only pay the net back to the company. You need a tax expert to process this for you.