Pay back hiring/retention bonus?

[Chris22]

Putting the cart waaaaay before the horse here, but I may have a new job opportunity and I want to understand my total position.  I accepted a $5k hiring/retention bonus when I started my current gig.  I was approached for a new role at a competitor, and I may end up taking it if things go well.  I won't meet the requirements of the original bonus if that's the case. 

Obviously, I was paid $5k gross, and I netted something (way) less than that due to taxes, etc.  If I leave, and if my current employer comes back at me for the bonus (MegaCo, not sure they will notice or care, but you never know), how do I reimburse them?  For the whole $5k?  Do I file it as an unreimbursed business expense to get the taxes back?  How does this work?  I would still be way ahead financially if I made this move, and I could potentially/likely offset the cost with a hiring bonus from the new company, but again, just want to understand my position. 

[wbranch]

Typically you have to repay the full $5k. You can do either a deduction or a credit if >$3k. IRS pub 525 pages 33-34 tells you the options https://www.irs.gov/pub/irs-pdf/p525.pdf

[RedmondStash]

It depends on how you received the bonus. If you received the full $5k, you have to repay the full $5k. If you received $5k - taxes, you repay that amount, not the full $5k. The company will make it clear to you in a letter. (Yes, I've been through this too.)

You don't have to pay back money you never received.

I'm not sure if the company recovers the money they paid in taxes from the government, but then, that's not really your problem. I'd guess they do somehow.

[fatchad]

Not sure if this is helpful, but I received 6k in relocation expenses, lump sum payment from a third party company. I think this is probably handled a little differently, but regardless...

I had to sign a contract when receiving the payment. Should I leave before a year, I would owe the company 100%. If I left before 2 years, I would owe 50%. Anything beyond, I was (and now am, woot) free and clear.

Long story short, I'm sure it varies and you probably don't want to ask right now (with no job offer), but I'd poke around your company's policies on the intranet, handbook, whatever and see if you can dig up anything.

[DarrellEW]

My wife just took a new job and is in the same situation. She had a $10k signing bonus that had to be repaid. They are taking ~$6k from her final paycheck + unused vacation balance, and we had to cut a check for the remaining ~$4k.

I assumed that this would be reflected on her W2, but now you've got me wondering if that will actually be the case. We should be getting her final paystub in the next couple weeks, so I'll try to remember to update this thread on how it is reflected on the paystub since that should be a good indicator of how it will be reported on the W2.

[JLee]

If this new company really wants you, you could consider asking that they repay your old signing bonus for you.

[Chris22]

If this new company really wants you, you could consider asking that they repay your old signing bonus for you.

I probably would, but I want to ask for a couple other things as well, so I need to know whether I’d be laying out $3k or $5k to know what to ask for.

[inline five]

You need the $5k and they will tax that just like normal income.

When you file taxes you will recoup the difference. My industry is handing out hiring bonuses over upwards of $30k so I am seeing guys run into this issue.

[Rubic]

If this new company really wants you, you could consider asking that they repay your old signing bonus for you.

I probably would, but I want to ask for a couple other things as well, so I need to know whether I’d be laying out $3k or $5k to know what to ask for.

Ask for the $5K.  I was in a similar situation in my second job out of college.  If the
new company values you, they shouldn't have a problem with comping you on
similar terms as your prior bonus.

I did try to negotiate a pro-rated payback of my bonus with the old company
for my 9 months of work (and agreed to pass on savings to new company),
but old company enforced the entire bonus payback.  I was happy to leave
them.

[Chris22]

If this new company really wants you, you could consider asking that they repay your old signing bonus for you.

I probably would, but I want to ask for a couple other things as well, so I need to know whether I’d be laying out $3k or $5k to know what to ask for.

Ask for the $5K.  I was in a similar situation in my second job out of college.  If the
new company values you, they shouldn't have a problem with comping you on
similar terms as your prior bonus.

I did try to negotiate a pro-rated payback of my bonus with the old company
for my 9 months of work (and agreed to pass on savings to new company),
but old company enforced the entire bonus payback.  I was happy to leave
them.

It’s not just the $5k, there would be other considerations as well, such as covering forfeited bonus, etc etc.