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mayu-irs
New Member

Bonus payback - do I need to pay back tax amount as well?

I received a joining bonus 50K Jun 2017 when I took up a new job. The contract I signed had a clause which required me to return the joining bonus if I quit within 12 months. When I got my second pay check, I had salary ($3692.31)+ signup bonus ($50,000) and total is $53,692.31. Out of which the company withhold taxes ($29,665.31) and I got $240227.00.

I quit after 5 months and was ready to payback the bonus amount I received from them. However, the company has asked me to pay them the full amount $50,000 (what I received ~ $21,600+ taxes they withheld ~ $28,400) of Signup Bonus.


Is there a way out where I don’t have to pay the taxes on bonus that they withheld (approximately $28,400) and only I can pay the amount that I got from Sign Bonus approximately $21,600. 


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Also, what are different options that I have to handle this situation and which one will be best for me?

1 Best answer

Accepted Solutions
TaxGuyBill
Level 9

Bonus payback - do I need to pay back tax amount as well?

Because the repayment was in the same year as the payment, you only need to repay the 'net' amount you received.  The employer must file an amended 941 to recoup the withheld taxes.

If the repayment was in a different year than the payment, then you would follow Tom's directions in the other answer.  You would need to repay the full amount, and then make an adjustment on your tax return for the year of the repayment.

This first link refers to the same situation when there is an "error", but as the second link shows, the same procedure applies:

https://www.irs.gov/publications/p15#en_US_2017_publink1000202537

https://tax.thomsonreuters.com/blog/cs-professional-suite/cs-payroll-solutions/overpayments-and-repa...



View solution in original post

5 Replies
SweetieJean
Level 15

Bonus payback - do I need to pay back tax amount as well?

You need to see an attorney.
TaxGuyBill
Level 9

Bonus payback - do I need to pay back tax amount as well?

Because the repayment was in the same year as the payment, you only need to repay the 'net' amount you received.  The employer must file an amended 941 to recoup the withheld taxes.

If the repayment was in a different year than the payment, then you would follow Tom's directions in the other answer.  You would need to repay the full amount, and then make an adjustment on your tax return for the year of the repayment.

This first link refers to the same situation when there is an "error", but as the second link shows, the same procedure applies:

https://www.irs.gov/publications/p15#en_US_2017_publink1000202537

https://tax.thomsonreuters.com/blog/cs-professional-suite/cs-payroll-solutions/overpayments-and-repa...



TomYoung
Level 13

Bonus payback - do I need to pay back tax amount as well?

Date confusion

SweetieJean
Level 15

Bonus payback - do I need to pay back tax amount as well?

The bonus was paid in 2017. If the repayment also happens in 2017, it will be a wash as shown on your W-2.
Juliennego
New Member

Bonus payback - do I need to pay back tax amount as well?

When repaying a different year, if repaying the gross amount, Can you lose money or do you usually get the taxes that were withheld back on your return?
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