<prompt> Human: Edit: Its been made clear that income is reported when received, not vested. If it is later rescinded it is reported as a deduction. This makes sense. The remaining mystery to me is why tax was withheld in a state that I did not currently work or reside in, but that I interned in a few months prior. Thank you for the responses.I received 50,000 for signing a full-time contract with a company this year. The contract explicitly states: You will not actually earn the sign-on bonus unless you remain a full-time employee with the Company through and until the one-year anniversary of your Start DateI dont start until Feb 2018, meaning the bonus doesnt vest until Feb 2019. My employer has included this 50k on my earnings for this year, 2017. This poses a massive tax disadvantage, effectively disqualifying me from claiming the AOTC. Is this able to be disputed, and what would my primary course of action be?In addition to reporting it now, state taxes were withheld by the state the company is HQed in, a state that I did not currently work or reside in but previously interned in a few months prior.  <response>: If youve received the money, its income. If its later taken back from you, then you can claim it as a deduction. 