Announcement

Collapse
No announcement yet.

Signing Bonus - Pay Back Massachusetts

Collapse
This topic is closed.
X
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • Signing Bonus - Pay Back Massachusetts

    Hi,

    My signing bonus contract stated that I would pay back the full amount if I left b/4 1 year and 1/2 if I left before 2 years. I am leaving after over 1 year of service and so I owe the company 1/2 of the bonus. Let's assume the amount was 10,000 --- my question is do I pay back $5000 or the actual amount received (i.e. minus social security and medicare). What I have read thus far and according to friends of mine in other states who were in similar situations, they only paid back the bonus minus social security and medicare (federal and state taxes are not deducted). However, my employee disagrees and thinks that I owe the entire amount back since they will only be refunded their portion of soc. sec. and medicare, but not the employee's portion. Any help would be much appreciated.

  • #2
    Since it appears likely the payment was made in a previous year, they are allowed to ask for the gross overpayment back (however, if they do, they should then turn around and refund you the FICA/Medicare taxes related to that gross). You will get a W-2C for the year in which the payment was made. Then you should see a tax preparer for handling this on your 1040, because it does tend to get a little complicated.
    I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

    Comment


    • #3
      fica/medicare

      Hi,

      Thank you so much for the reply. You are correct, it is in two different years, however, I am still not clear how they repay the medicare and FICA to me. Will they only be obligated to do that after they file with the IRS for refund? Since they garnished my wages, aren't they essentially not paying payroll taxes on the amount they garnished --- that does not seem like the right way to do it. However, for the employer, it's clean and they get their money back easily and do not pay payroll taxes on it --- for me it seems much more complicated. Any suggestions on how to convince them to repay the medicare and FICA taxes to me?

      Thanks

      Comment


      • #4
        It's semantics, but the employer didn't "garnish" your wages. A garnishment is an order issued to your employer by the court or other authority (such as the Child Support Enforcement Agency) requiring the employer to withhold and remit certain deductions to satisfy your debt; an employer cannot "garnish" it's own employees wages.

        Regarding "convincing them", I don't have a link I can provide you. What I can tell you is what the IRS says is the proper way to do it. The accountant or payroll person should (theoretically) know this. The W-2C instructions here have some information regarding how to record repayments of overpaid wages (see page 2): http://www.irs.gov/pub/irs-pdf/iw2cw3c.pdf
        I don't respond to Private Messages unless the moderator specifically refers you to me for that purpose. Thank you.

        Comment

        Working...
        X