Repay signing bonus


T

topsocket

I received a small signing bonus with a job I may be
leaving. The condition of the binus requires 100% repayment
if I leave before a specified period.

Now, the "bonus" was $5,000.00, but after taxes and such, I
only receieved ~$3,100. What amount, then, do I need to
repay to the employer? If it's the full amount, how can I
recoup the difference between amount paid and amount
awarded?

Thanks.
 
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F

Frederick Lorca

Now, the "bonus" was $5,000.00, but after taxes and such, I
only receieved ~$3,100. What amount, then, do I need to
repay to the employer? If it's the full amount, how can I
recoup the difference between amount paid and amount
awarded?
Your employer probably requires you to repay the full
$5,000. In the year you repay the bonus, you may:

1) deduct the repayment as an itemized deduction on Schedule
A, not subject to the 2% of adjusted gross income (AGI)
floor, or

2) claim a refundable credit for the amount by which the
$5,000 increased your tax for the year you received it.

You may choose whichever of the two options above yields the
greater tax benefit.

For more information on repayments, see Repayments beginning
on page 31 of IRS Publication 525.

http://www.irs.gov/pub/irs-pdf/p525.pdf

Frederick Lorca
 
R

Rich Carreiro

topsocket said:
Now, the "bonus" was $5,000.00, but after taxes and such, I
only receieved ~$3,100.
No, you received $5,000.

Then, essentially acting as your agent, the company made tax
payments on your behalf from your funds.

It's like you got $5,000 and then turned around and paid the
$1,900 in taxes to the government yourself.
What amount, then, do I need to repay to the employer?
$5,000

If it's the full amount, how can I recoup the difference
between amount paid and amount awarded?
Since it is for more than $3,000, read up on "claim of
right". You may well be out of luck with respect to social
security and medicare taxes, though.
 
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S

Steve Pope

What amount, then, do I need to repay to the employer?
Not necessarily, employers have certainly accepted partial
payment, or even no payment at all in these cases.

In my opinion it would not be unreasonable to offer the
employer the net amount of the signing bonus check, and see
what they say.

Tangentially, if the employer does accept $3000 or $5000
back from the employee, how does the employer report it? As
revenue?

Steve
 

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