@agrawal_aashish wrote:
Hi @Opus 17 ,
I've a similar question but slightly different.
I received $15k signing bonus in 2019, and quit my job in 2020. I have to now repay 50% of it minus Social Security/Medicare which is approximately ~$7k.
Option 1: I could either repay the $7k, and ask for a tax refund in my 2020 return
OR
Option 2: I'm eligible to receive my 2019 annual bonus (~$10k before tax), and my former employer is fine with adjusting my $7k obligation against this annual bonus. In your opinion, is this okay to do, and would I lose money with this option vs. Option 1.
I'd really appreciate your input. Thanks so much for your time!
-Aashish
Most of the time, you will come out the same, or slightly ahead, by letting your employer net your current bonus against the repayment. That avoids hassle with social security and medicare (which you don't quite come out even on with option 1); it avoids extra paperwork at tax time; and it avoids having to research your state's claim of right procedure (if they even have one).
The only time you would make out better with Option 1 is if your 2020 income will be substantially lower than 2019 so that it places you in a lower tax bracket. (Going from the 24% to 22% bracket, you would only get back $140 more using option 1, but going from the 22% to the 15% bracket you would get back $490 more using option 1. However, as I mentioned, I'm still not sure you are made entirely whole regarding your state taxes or social security/medicare using option 1.)
