Repayment of sign on bonus

USA Discussion in 'Individuals' started by lndelro, Feb 9, 2019.

  1. lndelro

    lndelro

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    in 2017 taxpayer received a $8,000 gross sign on bonus - net amount was $5,000. Taxpayer did not stay with the employer the full year so he had to pay the $5,000 back to the employer. The employer DID NOT correct the 2017 W-2 so the gross wages on the 2017 W-2 were not reduced by the $5,000 that was repaid. When 2017 return was prepared by big box tax store, the $5,000 repayment was ignored. I am considering filing an amended 2017 return however I'm not sure what the options are for reporting the repayment. If this repayment has to be shown on Schedule A, there is no benefit. If the employer did what they were supposed to do, the Gross Wages would have been $5,000 less so I'm thinking of showing it as a negative # on Line 21.

    The difference between the 2 approaches is about $1,100 in EIC

    Thoughts?

    Thanks
     
    lndelro, Feb 9, 2019
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  2. lndelro

    kirby VIP Member

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    kirby, Feb 10, 2019 at 4:56 AM
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  3. lndelro

    debora

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    A signing bonus is offered to incentivize a skilled employee to work for a company or to encourage the employee to stay with the company for an extended period of time. An employer will usually make a bonus offer based on the employee agreeing to remain with the employer for a set period of time. A sign-on bonus occasionally comes with conditions attached. If the employee signs a repayment agreement stating that they agree to return all bonus monies if separated from employment before a certain date, that employee would likely have to return the money if they decide to leave before that date. The Court may consider the sign-on bonus and agreement a valid contract and may enforce it against an employee who leaves early and does not return the money, considering the employee's action to be a breach of the agreement.
     
    debora, Feb 11, 2019 at 9:57 AM
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