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Bonus repayment question

dukebound85

dukebound85

macrumors Core
Original poster
Jul 17, 2005
19,218
4,342
5045 feet above sea level
All, I have found myself in a situation where I need some clarification.

I had recently graduated with my MS in atmos science. Additionally, I had more recently taken a job with a firm where my MS did not apply. I have found a job that does make use of my degree and where I would feel happier (current job is 100hrs a week and most of my off time is not even at home but in a hotel)

With that said, the job I am in now gave me a sign on bonus and moving amt. The sign on bonus was taxed before being given (ie it was 5k and i netted 3k or so). The moving allowance was also such that they gave me a lump sum (1000 and then took taxes out of future earnings, ie as if I netted 1600 or so and received 1000)

If I leave early, I have to pay back the bonus and moving allowance. My question is what amounts?

1) Would I have to pay back 5k in bonus and 1k in moving?
2) Would I have to pay what I netted? ie the 3k in the bonus after tax and the 1 k in moving?
3) If it is option 1, would it then be taken out of my w2 as earnings, effectively receiving the tax refund of 2k extra at the end of the year?

Or am I off base somehow?

Someone in HR or encountered similar situations have any guidance?

Thanks!
 
The terms have got to be covered in your offer letter or employee handbook somewhere. I'm sure it varies by company.
 
He's not asking a company policy question, but a tax question. Does returning the post tax money also undo taxes already paid? I'm no expert but I wouldn't return more than I was paid.
 
You'd need to consult with a Tax professional in your state, but here is my best guess:

You'd have to pay the $5,000 and $1,000. The taxes would be up to you to get back from the government if thats allowed. Again, I am guessing here.
 
Koodauw said:
You'd need to consult with a Tax professional in your state, but here is my best guess:

You'd have to pay the $5,000 and $1,000. The taxes would be up to you to get back from the government if thats allowed. Again, I am guessing here.
Click to expand...


This is correct. You'll file an amended return if it was last year or you'll have to suck it up until tax time if it was this year.
 
When did they pay you these sums? If it's at all recent then there's at least a possibility that your tax payment that they withheld hasn't been sent to the IRS yet. If that's the case then you might be able to return the cash you received and they'll just cancel the whole transaction
 
You definitely need to get yourself in with a tax professional but it has been said that you do need to return the full amount paid pre-tax. I too want to know how long they required you to stay with them before you left. I worked for a company who required 18 months of service following the disbursement of any tuition payment unless termination of employment was the result of a layoff. The clock reset every time I received tuition reimbursement.
 
This is not legal advice. You should consult a tax professional.

Unless your contract specifies otherwise, you have to return the full amounts (pre-tax) of the bonuses. But, then, those bonuses will not be included in your W2, which means that if you paid excess taxes based on your lower compensation amounts (which seems possible but depends on your tax situation overall), you will get the taxes back from the government, not your employer.

If this straddles a tax year, you will need to ask your employer for an amended W2 for the prior year and then file an amended return.

Note that there are specific tax provisions that apply to things like relocation expenses and bonuses (that's why the two bonuses are taxed differently) and so you really do need to go talk to a tax accountant for 30 minutes. Or, if your company is large enough, they may have someone in-house who can advise you.
 
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