Question about sign-on bonuses and taxes......

[A1cntrler]

My wife has been hired on at a new company making a good deal more money than her last job. My question is that she recieved a bonus that had to be paid back if she was not at the job for a certain amount of time. This is the second time she has run into this situation. With her first company (Walgreens), the amount that was paid to us in bonus money had taxes deducted from it. When she terminated early to change jobs, the company sent us a bill to recover the amount we recieved after taxes, and a form that allowed the company to recover the amount paid in taxes themselves. Her next company (Omnicare) gave her a sign on bonus as well. Taxes were deducted from that amount before we recieved it. Today was her last day at that employer, and they told her today that she needs to cut them a check now for the full amount ($5000) before she will be paid for her last week/overtime pay. I am wondering if we pay them the $5000 back in full, will we get the rest back in our taxes at the end of the year, or are we out more money because of it?? I have never been good with this sort of thing. Omnicare has been pretty shady with thier payroll stuff (not paying overtime, if she works for 12 hours one day which was quite common, anything over 8 is paid in half time, yet she could not just leave as it would have resulted in her being fired) This is one of the reasons she is leaving. Anyways, just looking for a bit of advise... Thanks!

 

[shawn stonbraker 2]

I think it will be on your taxes since they paid them when they gave her the bonus. The difference is that you will not of course get all the taxes that they paid (as usual), so it won't be even. I know that doesn't make much scence but that is how I see it. (you never get all the taxes you pay back on your return right?) I would cut them a check with the taxes taken out and send the taxes in to the Gov. for them like they did for you! lol. That way you'd be even!

 

[WXMotorSports DecalsPartsAccs]

Great idea Stonemiser. Reminds me back in the late 80s, I believe when Cali was paying IOUs to their vendors. Well the Nevada company that I worked for had property in Cali and paid their property taxes with those IOUs. I thought that was a classic move.



A1 might want to seek out a CPA on that your question.



Thanks,

SST

 

[A1cntrler]

I have an appt. with our financial advisor this weekend and was going to bring it up to him, but I figured that this board could help out a little. It just sucks to stroke a check for $5k a couple of weeks before X-mas. I know we would have to pay it back, but it took Walgreens about 6 months to catch up with us.... Guess we aren't this lucky this time around.

 

[Johnny O]

A1 might want to seek out a CPA on that your question.

Werd. However, if the bonus was considered taxable income when she received it, then it MAY be tax deductible when you pay it back. I'm not sure about this, but it's something to ask about. And tell the wife that next time stay there long enough that it's not an issue. :lol:

 

[A1cntrler]

She would have liked to stay there, however her boss ruled by fear. He had a lot of other issues that have been brought up to the company by several previous pharmacists as well such as harassment (also, he only hires women to work there, men interview frequently, but are never hired). No pharmacist has stayed and worked under him for longer than 9 months.... (you have to stay 12 mos. to not pay the hire on bonus back....)

 

[Thomas Rogers]

Regarding Stonemiser idea of sending the company a check for $5K less the personal taxes, and sending the personal taxes to the federal (and possibly state) agencies, that won't really work.



You see, the tax rate and basis of a corporation is different than that of an individual. Corps usually only pay around 10% fed and state tax on profits. That returned 5K adds to their possible profit. However, the company could be in the hole for the year and owe nothing on that 5K.



The issue here is that you are trying to link the two events and the monies and that is what is causing the problem. Think of it this way; your wife was granted a $5K bonus, which was normal income, taxed as any other income from a personal tax standpoint. She also entered into a contract in which she would pay to the company a refund of $5K if she stayed at the company for less than a certain amount. I assume it was prorated too (if she stated a little longer it might have dropped down to a $3K, or lower amount). Thinking of it in that way, she owes the penalty. The tax situation of the prior event is moot.



TJR