Returning a signing bonus


M

markdiver

I recently started a new job in which they were nice enough to give me
a signing bonus. Unfortunately I dont like the job very much and think
I may leave soon.

When I got the bonus I was told that if I voluntarily leave
within 12 months I have to pay it back, which sounds fair,
but the problem is that I got the bonus the first week that
I started, before I filled out a W2 and got hit hard on
taxes.

My question is, if I leave this job and they ask for the
full amount back, do I have any recourse on my taxes ? Can I
deduct the full pretax amount from my income taxes next
year, or do I just lose out on the difference between what
they gave me and what I really received after tax?

Thanks,

Mark.
 
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A

A.G. Kalman

markdiver said:
I recently started a new job in which they were nice enough to give me
a signing bonus. Unfortunately I dont like the job very much and think
I may leave soon.

When I got the bonus I was told that if I voluntarily leave
within 12 months I have to pay it back, which sounds fair,
but the problem is that I got the bonus the first week that
I started, before I filled out a W2 and got hit hard on
taxes.

My question is, if I leave this job and they ask for the
full amount back, do I have any recourse on my taxes ? Can I
deduct the full pretax amount from my income taxes next
year, or do I just lose out on the difference between what
they gave me and what I really received after tax?
If you make a repayment in 2005 for income you were taxed on
in 2004, you do have recourse assuming that you have a tax
liability in 2005. The answer is on pages 31 to 32 under
"Repayments" in IRS Pub 525.
http://www.irs.gov/publications/index.html
 
D

D. Stussy

markdiver said:
I recently started a new job in which they were nice enough to give me
a signing bonus. Unfortunately I dont like the job very much and think
I may leave soon.

When I got the bonus I was told that if I voluntarily leave
within 12 months I have to pay it back, which sounds fair,
but the problem is that I got the bonus the first week that
I started, before I filled out a W2 and got hit hard on
taxes.

My question is, if I leave this job and they ask for the
full amount back, do I have any recourse on my taxes ? Can I
deduct the full pretax amount from my income taxes next
year, or do I just lose out on the difference between what
they gave me and what I really received after tax?
See the tax topic "Claim of Right." That's what you have.

Note that if under $3k, you must take the Schedule A
deduction. If over $3k, you have the choice of the
deduction or the tax credit version - and usually, people go
with the version that produces the larger tax benefit.
 
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