I received a sign on bonus of $2000. However I am leaving the company before the 2 year time requirement so I have to pay it back. I noticed on my last check that they deducted my bonus AFTER taxes so now I've been hit twice. Is this correct? If not, what can I do now that it's already been done?

Many thanks for your help!

AtlantaTaxExpert

You should claim the returned bonus as an adjustment to income IF the company did not subtract it from your income already.

Look at your wages year to date figure on your check stub to determine if the company already did that. If so, you will get the income taxes withheld when you file your tax return.

Make sure the company adjusted your Social Security and Medicare tax withholding as well.

bbiltz

Thanks for the reply! I looked over my stubs and they have not subtracted the bonus from my YTD earnings. I also checked deductions and they DID tax me again on Federal, SS and Medicare Tax. So yes, they have double taxed each of those 3 areas. I'm not sure from what you said in your previous email if they were supposed to tax the SS and medicare again?

I did make a call today and spoke to both HR and payroll (the same people who originally told me I wouldn't be taxed on the bonus if they took it back) and offered to write a check for the $2000 just to keep it out of payroll and make it simple. They are waiting to hear from "their" boss but I do feel like I'm going to get the 'run around' some more.

Going back to the SS and Medicare tax, CAN they tax that twice legally? If you think I'm just spinning my wheels please tell me. But something just doesn't seem right here.

Thanks a ton!

AtlantaTaxExpert

No, they CANNOT legally tax you twice (for SSN, Medicare, and income tax) on the same money.

Keep after payroll to make sure they get it right. If they refuse to fix the problem, contact the IRS and get them involved. Your former employer may not listen to you. They WILL listen to the IRS.