Hello,
I have potential candidate that I am offering a sign on bonus to. She wants to know if she leaves the company within a year (bonus agreement), will she have to pay back the full amount versus the net amount she paid. Can somebody please help me with this one. Thank you.

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Originally Posted by fchampion

Hello,
I have potential candidate that I am offering a sign on bonus to. She wants to know if she leaves the company within a year (bonus agreement), will she have to pay back the full amount versus the net amount she paid. can somebody please help me with this one. Thank you.

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I am going to say that she will have to payback the gross amount (full amount) as the company will report that on tax her taxable income. So if she make 100K and had a 10K bonus her income would be 110K on her W2, by returning the 10K her taxable income would only be reported as 100K. Since she paid the taxes already on the 10K she should receive them back on her income tax return. Hope that helps.

What is the company policy? Does an employee have to stay the whole year to be entitled to the bonus? Is it pro-rated if they don't?

If the question is from the standpoint of whether they have to pay the amount of the bonus or the amount they received after withholding, then Greg is right, the pay the amount of the bonus.

You may be able to avoid the issue, by asking your accountant if you can pay the bonus and 1099 the amount instead of W2 it.

But there is another issue. I would be concerned about a candidate that is so concerned about this issue.