Repaying sign on bonuses - how do I handle this?

I joined the firm in April 2020 and received a sign-on bonus for $20K. I will be leaving the firm on Dec 31, 2020.

There are typically two types of employee repayments, (a) repayment in the same year and (b) repayment in the subsequent year. I would like to avoid the headaches of dealing with the tax implications by repaying in the subsequent year.

My questions are:

1. If I resign within the same year (Dec 31, 2020) but the firm receives my payment in 2021, does that count as repayment in the subsequent year?

2. Can I repay a sign on bonus before my resignation date?

558

Level 15

Dec 5, 2020 1:07:27 PM

1. If I resign within the same year (Dec 31, 2020) but the firm receives my payment in 2021, does that count as repayment in the subsequent year? Yes it does.

2. Can I repay a sign on bonus before my resignation date? There is no law against it so if you can then you should do it.

Returning Member

Dec 5, 2020 1:19:52 PM

@Critter-3 Thank you for your reply! I've been reading that if paid in the same year, the employer will file an amended 941.

Just to clarify so I'm covering all my bases, do you know if I will need to fill out / should expect tax forms if I repay in the same year or will repaying my firm (and completing any firm-related documents) be all that I have to do from my end?

Level 15

Dec 5, 2020 3:52:34 PM

Talk to the employer to make sure you are on the same page but normally if the repayment is done in the same tax year to you it is treated as not having been done at all so the W-2 will reflect that situation.

Why sign in to the Community?

Repaying sign on bonuses - how do I handle this?