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    coffeegal's Avatar
    coffeegal Posts: 5, Reputation: 1
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    #1

    Apr 10, 2005, 07:48 PM
    Sign-on bonus taxes
    Hi,
    I started working in July 04 (was in college before then). I received a signon bonus from my company, before I started work. Hence, I was not taxed on it before starting. I was supposed to have been after I started working, but that never happened. So I know for this return I should be paying taxes on that bonus.

    My bonus was included in the wages amount of the w-2, with my salary. However, whenever I do the federal tax returns (Form 1040), via turbo tax online, or manually or any other method, I always end up with a refund, even though I know I should be paying a substantial amount in taxes. I have been putting the wages amount on the 1040 form, subtracted the deductions, etc.
    Same problem with the state (NJ) form. I'm very confused :(

    Any idea why this is happening? Should I be reporting the bonus amount elsewhere on the tax form?

    Also, how is the bonus taxed? At what percentage rate?

    Any help will be very much appreciated.
    Thanks.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #2

    Apr 10, 2005, 08:29 PM
    CoffeeGal:

    If the bonus was included as part of your reported wages on the W-2, you are making this more complicated than it really is. The bonus IS being taxed as part of those wages.

    How much was the bonus?

    How much are your wages as reported in Box #1 of your W-2?

    Answer these questions and I can determine for sure what you taxes should be.
    coffeegal's Avatar
    coffeegal Posts: 5, Reputation: 1
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    #3

    Apr 11, 2005, 05:33 AM
    Hi,

    Thanks for the quick response, I really hope I am making this more complicated than it is :)

    My bonus was 11,000. My wages on the W-2 were 30,483.45, and federal tax withheld is 3434.38

    Thanks!
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #4

    Apr 11, 2005, 08:24 AM
    CoffeeGal:

    As stated before, the bonus has been factored into the W-2.

    Assuming you are SINGLE with no dependents, and no one else claimed you as a dependent, your tax liability is $3,079. Since you had $3,434 withheld, your refund would be $355.

    If your parents are claiming you as a dependent (legally permissible since you were a student for at least five months in 2004), you cannot claim your own personal exemption. In that case, your tax liability is $3,544, and you would have to pay $110. I recommend you speak with your parents and get them to pay the $110 and reimburse you the $355 refund you would get if you claimed yourself. It is more than likely they get much more benefit from your exemption than you do.

    BTW, the decision to have your parents claim you or you claiming yourself is not simple. If your parents have exceptionally high income, they may not benefit from cliaiming you. If their income is not super-high, but over $105,000, they may not be able to claim any of the education credits/deductions.
    coffeegal's Avatar
    coffeegal Posts: 5, Reputation: 1
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    #5

    Apr 11, 2005, 09:02 PM
    Thanks! And one more question...
    Thanks for the prompt response ATE! Much appreciated and very helpful... I guess for some reason I always thought the tax on a 11K bonus would be much more...

    I have some questions, regarding state tax filing. I am currently living in NJ working in New york city. As I mentioned I started working August 2004, and on F-1 status. In oct 2004, I received my H-1B.

    1. I know I need to file the New York State Non-resident return (IT-203). And I think the New Jersey Non-resident/part-time resident return (NJ-1040 NR) Is this correct? Are the state filings any different for residents/non-residents not meeting the substantial presence test?

    2. However, when filing the NJ form, the amount I received from NJ sources was 0 (since I worked for a company in NY). Hence, the tax ends up being 0 - is this correct? I was under the assumption that I pay tax to NJ and NY, and then file NJ Schedule A to retrieve my NY income.

    Only NY state tax was withheld from me (for a total of $1006 on a $30483 wages).

    Thanks again...
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #6

    Apr 12, 2005, 07:46 AM
    CoffeGal:

    1) That is correct. Substantial Presence is not an issue for state tax returns. In fact, I know of no state that makes any special allowances or requirements for resident or nonresident aliens.

    2) New Jersey is also taxing your NY income. However, on Schedule A, they give you a credit for the NY taxes paid, usually resulting in zero taxes due.

    I assume you rent. If so, you should be entitled to a $50 refund from NJ due to the FAIR Rebate for tenants It may not apply for part-year residents, but I do not think so.
    coffeegal's Avatar
    coffeegal Posts: 5, Reputation: 1
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    #7

    Apr 13, 2005, 08:22 PM
    ATE: Thanks so much for all your help!! :)
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #8

    Apr 14, 2005, 10:10 AM
    Glad to help!
    newtonyc's Avatar
    newtonyc Posts: 1, Reputation: 1
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    #9

    Jan 5, 2006, 08:35 PM
    Atlanta Tax Expert
    ATE -

    Hopefully you are still monitoring this board, or any one else who is familiar with NYC tax issues.

    I am currently in the Active Duty Military and claim Texas as my state of residence for tax purposes.

    I will be relocating to NYC later this year after getting out of the military, and have accepted a sign-on bonus, which was paid in tax year 2005. My future civilian employer withheld around 8% state tax.

    Since I do not currently live in NY or NYC, is there any way that I can utilize my residency of TX for this payment (TX has no state income tax)? When I review the NY non-resident instructions, it says that military members may pay tax on second incomes. But, since I do not live in NYC, can I consider myself exempt from paying this?

    If I am required to pay NY tax on this, do I have to pay the embedded NYC tax (around 3%, I think), even though I do not live in the city?

    This situation is rather complicated, and I have struggled to find good advice. Any assistance that any one can provide would be greatly appreciated.

    Thanks!

    NewtoNYC
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #10

    Jan 6, 2006, 01:56 PM
    NewtoNYC:

    Since you do not currently live in NYC, you owe them no taxes.

    As for NY state, since the bonus was paid from a NY state-based company and since you eventually will be moving to NY state, the state's position will probably be that you earned this money within the NY state borders and thus you are liable for NY state income taxes.

    I suggest that you contact the NY state Department of Taxation (they are listed on the NY state government website) and send them an e-mail (do NOT identify yourself) explaining the situation and ask for a ruling.

    You can also just file a NY state tax return as a non-resident and request a refund of all the money withheld. If you list your Teaxs address, they may just send you the refund without question.
    reallyrill's Avatar
    reallyrill Posts: 3, Reputation: 1
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    #11

    Jan 19, 2006, 03:32 AM
    Ok Atlanta Tax Expert. I work for the railroad here in Va. I travel out of state almost everyday where I am allowed to claim meals and lodging with the company. I get twelve dollars for meals and the lodging is paid directly to the hotel from a lodging card given to me by the company. My question is are there any tax breaks for going to work out of state every day? I am usually out of the state about 12 to 20 hours daily and then I return home and take rest which puts me at home for 10 hours usually. I do this routine for ten days consecutively and then take three days rest. So what do you think any breaks for working out of state.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #12

    Jan 19, 2006, 07:13 AM
    Reallyrill:

    Since you spend the night away from home, this is business-related travel for which you get partially reimbursed. While you get a daily meal allowance of $12, that is much lower than the Meals and Incidental Expense Per Diem allowed by the IRS (which is at least $35 a day, and may be higher for your area of the country). You can claim the difference (about $23) for every day you are out of town. You can also claim the mileage costs from your home office to wherever you travel. At an average rate of about 40 cents per mile, the mileage can add up.

    Now, to claim these expenses as a deduction, you must fill out Form 2106. Then you have to meet two requirements:

    1) The total expenses accrued must exceed 2% of your Adjusted Gross Income. So, if you make $100,000, the first $2,000 of your expenses do not count.

    2) You must itemize on Schedule A to claim these expenses. If you own a home and are paying a mortgage, you probably already itemize. If not, then your expenses must exceed $10,000 (the standard deduction for a married couple filing jointly) to be claimed.

    I recommend that you get professional tax help. You also need to keep a mileage log, preferably on a daytimer, a notebook computer or a PDA.
    reallyrill's Avatar
    reallyrill Posts: 3, Reputation: 1
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    #13

    Jan 20, 2006, 06:11 AM
    Additional Questions
    I see that I may be able to claim 40 cents per mile per trip in deductions. Is that figure of 40 cents the amount used by everyone exact number? Also because I am the conductor on a train that travels from Richmond to Rocky Mount almost daily due I quailfy for that paid mileage as long as I have my records. And by the way thanks for the help its great
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #14

    Jan 20, 2006, 08:19 AM
    Readyrill:

    The 40 cents a mile was a off-the-top-of-my-head average between two mileage rates:

    - 40.5 cents a mile on or before 31 August 2005.
    - 48.5 cents a mile on or after 1 September 2005.

    However, to qualify for these mileage rates, you must be driving your own car or truck. If you are riding a train, the mileage rates do not apply.

    Sorry about that!
    Rbrown023's Avatar
    Rbrown023 Posts: 1, Reputation: 1
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    #15

    Mar 8, 2012, 05:26 PM
    I have a question:

    If I received a sign on bonus from a company of 15k,
    That I was suppose to start, but they had budget issues and resended
    The offer, 1 week before starting, I have not received a w2 or 1099/1098, called the company and they said since I was not an employee
    I would not receive this, I think I should still claim
    The income, but where? I live in Florida, how do I know how much
    Is taxes, FICA, medical care, etc?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
     
    #16

    Mar 9, 2012, 08:36 AM
    If they did NOT ask for the money back, and they refuse to recognise you as an employee, then it is considered compensation as if you were an independent contractor.

    That being the case, you need to report the income on Schedule C and pay both income and self-employment taxes on the $15,000 (after deducting valid expenses associated with the work).
    Tejasaurus's Avatar
    Tejasaurus Posts: 1, Reputation: 1
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    #17

    Apr 11, 2012, 06:11 PM
    Hi ATE. I hope you still are active on this thread. If not anyone else familiar with NY state tax structure please help me.

    I started my work in CA from Jul 2011. Prior to that I was a graduate student in the state of NY. My visa status changed from F1 to H1B in Oct 2011.

    After I started work in Jul 2011, I received my my first pay-check and a sign on bonus separately. I received these checks directed to my NY state address as I had not updated my CA address with my employer still. Now, I have a W-2 with both CA and NY state forms. However I find that the state of NY had withheld tax for my first-pay check but not for my sign-on bonus. The state of CA had withheld for both my first-pay check and sign-on bonus.

    Shouldn't I be reporting this bonus amount that wasn't taxed while I file my taxes to the state of NY.
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
    Expert
     
    #18

    Apr 12, 2012, 06:51 AM
    If you had actually relocated to CA prior to receiving that first paycheck, then since you were neither working nor living in NY at the time of this payment it is NOT taxable by NY. I suggest that you file a part-year resident return with NY to cover your period of residency there. Assuming you had no income prior to moving to CA your NY reportable income is $0 and you will receive a full refund of the amount withheld for NY. You will also file a part year resident return for CA and include all your wages (both W2's) - you will probably end up owing some tax to CA, about the same amont as the refund you'll get from NY.

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