paid back signing bonus


A

Arvind

Hi,

I changed jobs last year. When I left my job, I was asked to pay back
my entire signing bonus and relocation bonus ($9000) they paid me in
2007.

I heard from experts that I can itemize this amount in schedule A. I
have a few questions and would appreciate your answers.

1. Can I deduct the money I paid back by itemizing it in schedule A?
2. If yes, can I itemize the full amount I paid? I heard that I
cannot itemize the full amount, but have to subtract 2% of my gross
income from it.
3. When I left my old company had to pay for my vacation hours. So
they deducted 9,000 from this to compensate for the signing bonus
+relocation I had to give back. That is, I did not really cut a check
to my company. I have a mail from them showing that 9,000 was taken
back. Will this be sufficient to claim this as a deduction?

Thanks,
Arvind
 
S

Steve Pope

Arvind said:
I changed jobs last year. When I left my job, I was asked to pay back
my entire signing bonus and relocation bonus ($9000) they paid me in
2007. [snip]
3. When I left my old company had to pay for my vacation hours. So
they deducted 9,000 from this to compensate for the signing bonus
+relocation I had to give back. That is, I did not really cut a check
to my company. I have a mail from them showing that 9,000 was taken
back. Will this be sufficient to claim this as a deduction?
It seems to me you have no deduction because you never returned
any net overpayment.

Steve
 
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R

removeps-groups

I changed jobs last year. When I left my job, I was asked to pay back
my entire signing bonus and relocation bonus ($9000) they paid me in
2007.

I heard from experts that I can itemize this amount in schedule A. I
have a few questions and would appreciate your answers.

1. Can I deduct the money I paid back by itemizing it in schedule A?
2. If yes, can I itemize the full amount I paid? I heard that I
cannot itemize the full amount, but have to subtract 2% of my gross
income from it.
3. When I left my old company had to pay for my vacation hours. So
they deducted 9,000 from this to compensate for the signing bonus
+relocation I had to give back. That is, I did not really cut a check
to my company. I have a mail from them showing that 9,000 was taken
back. Will this be sufficient to claim this as a deduction?
If the 9k is included in your income (that is, in your W2 at the end
of the year), then you can deduct it. So pay attention to your W2
when you receive it. You're right about the 2% rule. The other
option, which will usually yield a better result, is to take a tax
credit using section 1341. See http://www.irs.gov/irm/part21/ch06s11.html
and search for "IRC Section 1341".
 
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D

D. Stussy

Arvind said:
I changed jobs last year. When I left my job, I was asked to pay back
my entire signing bonus and relocation bonus ($9000) they paid me in
2007.

I heard from experts that I can itemize this amount in schedule A. I
have a few questions and would appreciate your answers.

1. Can I deduct the money I paid back by itemizing it in schedule A?
2. If yes, can I itemize the full amount I paid? I heard that I
cannot itemize the full amount, but have to subtract 2% of my gross
income from it.
3. When I left my old company had to pay for my vacation hours. So
they deducted 9,000 from this to compensate for the signing bonus
+relocation I had to give back. That is, I did not really cut a check
to my company. I have a mail from them showing that 9,000 was taken
back. Will this be sufficient to claim this as a deduction?
1) The $9k had to be included on your 2007 W-2 as taxable. (However, as
your signing bonus was contingent on being an employee for a certain amount
of time - which you ultimately didn't stay for, you may not have had an
"unrestricted right" and therefore it might have been excluded from your
2007 pay.)

2) The $9k taken from your pay in 2008 had to NOT reduce your 2008 W-2.
(Technically, this yields an improper result under IRC Section 1341, but
when the employer recaptures it and excludes it from pay, you've received
your benefit of repayment).

If BOTH conditions are met, then you have a $9k deduction on line 28 of
your 2008 Schedule A.
Your questions:
1) Yes - subject to the above.
2) Yes; No. It is NOT subject to the 2% floor because the amount exceeds
$3k.
3) No. Depends on 2007.
 

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