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serogo321
New Member

Would a welcome bonus from an employer be tax-free if my employer pays it directly to my MBA school where I currently attend instead of paying it to me in my account?

Here are some details in case helpful/needed:
-I'm an international student currently attending an MBA program on an F1 visa.
-I did not file taxes in 2020. I only generated about approx $40k gross wages in a 3 month internship.
-I am no longer working and am back to full-time school until graduation in May 2022
-I will start a full-time job around August 2022.
-My future employer will give me an approx $30k signing bonus by end of November 2022
-Normally, that would be paid to my checking account (with all respective tax deductions)
-My question is: If my employer pays deposits those ~$30k to my school's bursar account (maybe characterize it as sponsorship / scholarship / tuition?) then would it be tax-free or would there be any tax charges and how much would it be?
-If it's tax-free, and I get my employer to pay it to the school, then my follow-up question would it be: My school then would probably generate a refund/stipend back to me resulting from the excess money after subtracting the tuition amount (like this: Employer payment   Student loan   School scholarship - School tuition = Excess money back to me), so would there be any tax assessment on that money being sent to me as a reimbursement/stipend?
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2 Replies

Would a welcome bonus from an employer be tax-free if my employer pays it directly to my MBA school where I currently attend instead of paying it to me in my account?

The money will be fully taxable to you as wages, no matter how it is received or paid. There are no tax benefits or deductions that apply in this particular situation.

 

If you were enrolled in coursework during the fall 2022, your employer could pay up to $5250 of tuition tax-free as an employee benefit, provided that the employer follows the rules regarding establishing a tuition benefit program.  Any amounts over $5250 would be included in your W-2 taxable income even if they were paid directly to the school. In this case, since you will have graduated in May, there is no way to treat your sign on bonus as a non-taxable tuition benefit.

Would a welcome bonus from an employer be tax-free if my employer pays it directly to my MBA school where I currently attend instead of paying it to me in my account?

Further, $40,000 of gross wages during an internship is more than enough to require you to file a 2020 tax return.  as a student on a capital F visa, you are considered a non-resident alien, and you would file a form 1040-NR. This form is not supported by TurboTax, you will need to find another tax preparer to help you prepare a nonresident tax return.

 

you might be exempt from income tax if you are covered by a tax treaty and you paid income tax in your home country, but this is complicated an individual to each country, and I can’t provide further advice on this topic. If your work was in connection with your educational program, you might be exempt from Social Security and Medicare withholding in the US, but you are not exempt from paying income taxes.

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