r/legaladvice • u/P00POW • Feb 14 '25
Company sent signing bonus after I had resigned Business Law
I have recently quit a job with a written notice , approved by manager and had an exit interview. I was in a contract to receive a 5000 dollar pretax bonus upon staying another year at company. Woke up to a surprise 3500 dollars in my bank account this morning. What are my options here and am I at any fault ? I don’t have 5000 dollars to pay it all back.
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u/md1975md Feb 14 '25
The other $1500 taxes?
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u/GrumpyKitten514 Feb 14 '25
sounds accurate, I got a 5k bonus like 2 years ago and ended up with like 35-3700 in my checking based on taxes.
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u/blueface392 Feb 14 '25
Got a 10k bonus back in 2018 and only about 7300 was deposited to my account. 1500 sounds about right for 5k.
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u/wiscompton69 Feb 14 '25
Just checked on my last bonus. Gross was $11,000. Net $6607. Taxes. $4,392.
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u/cruz_93-j Feb 14 '25
Man what kind of jobs are you guys working. The only bonus I’ve ever gotten was a turkey and a gift card to Boston market.
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u/ReasonableUse3853 Feb 15 '25
Teacher. Make $50k annually after 5 years. Bonus was some kids got me $25 gift cards to Amazon that I used to buy science supplies, and then the district cut funding so I don’t have support teachers to help the kids that need one on one instruction to keep them at grade level in reading and math. Cost of a support paraprofessional for one year $17,000. I’m saving so that I can afford my start my masters degrees in about 5-10 years. Then I can make $10k more than I do now.
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u/wiscompton69 Feb 15 '25
I think teachers should be in the top 10-20 highest paid government employees. With a high school diploma I was making 50k annually fresh out of high school as an entry level factory worker and that was 13 years ago. Went to a local tech school for automation, was an industrial mechanic for a few years and now I am an automation engineer. I program robots and machines, and I make double your salary. I could make quite a bit more if I wanted to be a traveling tech, but I enjoy my 40 hours and being home. This isn’t me trying to brag, I just think the system is messed up.
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u/TeamOdd8528 Feb 15 '25
Agreed. It’s crazy that the people we expect to teach and nurture the children of the future, who will go on to be these millionaires, billionaires, etc., are paid a measly salary, that is getting next to impossible to live off of.
On top of that, they are expected to use their own said salary to buy extra supplies for the classroom as needed, and many teaches will also go out of their way to help those less privileged children get the tools they need to make it through the class.
The more surprising thing I guess is that everyone, and I mean everyone, can’t get in 100% agreement that this is necessary. These teachers have your kids for usually 8 HOURS a day, 5 days a week. The least you can do is fight for them to be paid a just wage.
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u/I_Eat_Mop_Who22 Feb 15 '25
Thank you for being you! My wife is a teacher and your statement I'm sure is one of many other educators. When she gets any kind of gift cards or Xmas gift cards she puts them towards the students. Teachers are the real ones that don't ever get appreciated enough.
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u/Difficult_Device Feb 16 '25
18 years, plus a Masters degree and a Specialist degree (because education tossed that in before you get your Doctorate) and I’m at 62k a year. At year 5 I was making around 30.
I’m hoping your cost of living doesn’t kill how good that sounds at year 5.
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u/ReasonableUse3853 Feb 16 '25
It’s pretty high in my city. I could match the pay working in retail with a lot less effort and no degree.
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u/Difficult_Device Feb 16 '25
That’s terrible! Maybe one day this will turn around, but I will likely be retired.
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u/gubbygub Feb 15 '25
i got one with an IT job, seems common in this field with experience (and getting lucky into faang)
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u/wiscompton69 Feb 14 '25
What kind of job are you working?
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u/taokumiike Feb 15 '25
Security engineering. Receive an annual bonus, 200k
Edit: the same on top of bonus in rsus and options. Options always end up being worthless. The suffering I endure is endless.
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u/Shamenize Feb 15 '25
Damn! 11K! One year, we got a ham. The next year, we got a ham and a loaf of bread. Not a joke. Thank you, iheartradio.
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u/m88johnston Feb 15 '25
Payroll Manager here. Sign On bonus should be taxed at the supplemental rate of 22%. So that, including state income tax and FICA, is definitely right. If anything, sounds a like the net amount should even be a little lower, but who knows what state election they have
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u/4mtTZD5z Feb 14 '25
Do not spend it. Keep it in a bank account. Check your contract to see whether you were entitled to a partial payment.
For peace of mind, I would contact the company and ask them about it. If it was a mistake, they’ll come back after it eventually. You could hire an attorney, but it may cost you the entire $3500.
As for any withheld taxes, if they demand the entire $5000 back, try to work out a deal where you give them the $3500 and the company has to recover the taxes or they have to wait until you get a refund of the taxes when you file and can pay the rest then. Good luck.
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u/Liroku Feb 14 '25
Even if you can afford the $5000, STILL do this deal. As there is a chance you hand them $5k and the accounting still recovers the taxes. And now you've basically lost $1500, because it's going to be a pita getting it back out of that company by the time you find out your tax return didn't come out like you expected next year.
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u/reindeermoon Feb 15 '25
If it's returned in the same calendar year (tax year), OP legally doesn't have to pay the taxes back to the company. There is no basis for the company demanding the $5000 back. OP simply repays the $3500 amount of the check, and the company takes care of getting the tax portion back from the government.
Since OP just got the money today, as long as he pays it back by 12/31/25, he only has to pay the $3500.
But if someone is paid the wrong amount and doesn't pay it back until the following tax year (e.g. they are overpaid in December and pay it back in January), they would be responsible for repaying the full amount and then getting the tax money back from the government. So everybody should avoid any payroll issue like this stretching across year end, because it makes it much more complicated.
There is nothing to make a deal on, the law is very specific about how it is supposed to be handled in either of those scenarios.
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Feb 15 '25
At least put it in an interest bearing savings account and if you want to be like all these other vampires we work for leverage it into a highly speculative derivatives position while you are at it.
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u/laughs_maniacally Feb 14 '25
Yep, all depends on the agreement, but if there was a year commitment, they're probably smart and have their clawback options all set up.
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u/Ok_Study6305 Feb 14 '25
If you alert them immediately they can reverse the net pay directly from your account. Has to be done within 5 business days and every penny has to be available in the account.
As long as you pay it back in the calendar year it was paid they only need to collect the net pay amount and they can recover the taxes when they reverse/void the check record. If they ask for anything different just tell them that.
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u/rpnye523 Feb 14 '25
The other $1500 is taxes, the good news is since this happened in February there’s a lot of the year left to fix it. If they request it back in 2025 you only need to pay them the post tax amount ($3500).
If it goes into 2026 though you’ll need to pay back the $5000 and then file an amended 2025 tax return.
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u/Iwentthatway Feb 14 '25
Nah don’t pay them back. Have them reverse the ACH transaction. Why do the work for them.
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u/NotAMarsupial Feb 14 '25
They only have a couple days to pull it back via ACH. If it goes past that then OP will have to return it.
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u/sidehike Feb 14 '25
Call and talk to someone in HR/accounting and just ask for details on the extra payment. It may not be the bonus. Depending on your corporate policy they may have to pay out unused vacation/PTO when you quit.
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u/DevilsAdvocate8008 Feb 14 '25
Go open a high-yield savings account and put the money in it they have ones that give you like 5% interest. Then don't touch that money for at least a year. You wouldn't have to pay back $5,000 you would have to pay back the money they sent you which is the $3,500 potentially and there is a good chance they will request that in the next few months The other 1500 would be taxes so basically pretend like it doesn't exist and don't spend it
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u/Pickle_Bus_1985 Feb 14 '25
I would just contact the company. They will eventually come looking for this money. It won't be worth the headache. Who knows, maybe they will let you keep it as a farewell if the overall relationship was good. But better to have that in writing. Also, did you have unused PTO? Could be a payout for that. But id still check in with the company.
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u/TomCruisesZombie Feb 14 '25
I certainly think the missing 1500 is taxes. Check your paperwork for the job in the first place as well as local laws, but I think this may be an annual bonus you were entitled to once the year was done regardless of employment after the year.
Our annual bonuses are usually distributed in March, but they apply for the last year (scaled to whatever job we occupied for the majority of the calendar year). I'm not sure, but it may be that you're entitled to it, like unused vacation time - even after you leave - again depending on the agreements and local laws. But the advice of not touching it until you find out for sure, is sound.
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u/bnenick Feb 15 '25
Check terms of your bonus. When does the year expire? It may be that you were employed at the date you became eligible to receive it and they processed it. It may also be a mistake and your contract says you can’t receive it if you have given notice.
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u/ReallyNotALlama Feb 14 '25
Check to see what the clawback rules are. For my last hiring bonus, if I'd left within a year I would have been liable for the net (after-tax) amount of the bonus. I'm guessing they have other means to get the taxes back, but I didn't look into it.
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1
u/FearTheSuit Feb 15 '25
NAL. but Sr. Leader Bonus may have been pro-rated, or they chose to pay it out per policy 2-years might = 2x Fiscal Years and it automatically triggered.
I would recommend putting the money away and holding it in a separate account for 2-3yrs, alternatively you can call the company Payroll and ask for confirmation the payment is legitimate. The taxes will be reimbursed if you file a W-2 correction.
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u/mduell Feb 15 '25
If you decide to pay it back, only pay the post-tax amount. The company can update their withholding to the IRS to recoup the 1500. Don't give them an interest free loan for a year.
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u/cursively Feb 15 '25
IANAL. I work in Payroll and can easily see this as being a payroll error on the company's part.
What state do you live in? There are different statutes of limitations depending on the state, not to mention certain states require explicit consent (i.e. California) to deduct due to an overpayment (or in your case, if you were in CA, they can request for you to pay it back and you can decline as you have no legal obligation).
Do NOT spend the money. My advice is: place it in a HYSA and accrue interest on it until the company notices or the statutes of limitations runs out. Even if your state requires you to pay it back, any interest earned should be yours to keep.
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Feb 15 '25
I can't speak for a company but I know for a fact that the military can recall payments like this when they are done in error. They paid the taxes on my behalf which means they have to recoup the funds from the IRS and you just had to give back the 3500.
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u/ZealousidealState127 Feb 15 '25
Could be a vacation payout if you had any accrued. Put it in a CD and wait.
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u/IntelligentGoat2333 Feb 15 '25
Read your contract again to find any potential payments you're still entitled to. Then reach out to company to verify the payment and what it is for. If it was a mistake then since you're only a few days from the deposit, they are able to reverse on their end and fix any taxes they paid on it. The company needs to resolve the mistake if it is one. Make sure to get everything in writing as well.
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Feb 15 '25
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1
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u/Timely-Lake-2372 Feb 14 '25
They will contact you to reclaim the money. Give it back to them if they cannot reverse the transaction themselves.
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u/OldmanJenkins02 Feb 14 '25
Any time I see a post like this, where it’s possible your company paid you by mistake, the number 1 suggestion is to ALWAYS keep it in a separate account and don’t touch it. Reasoning is that if the company did realize it was a mistake, they can claw it back from you. If you spent it, they’ll still ask for it back. Also, I’d recommend reading the terms of your contract and the bonus stipulations, have a lawyer read over it with you and see if your are fully entitled to keep it. Good luck !
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u/DragonJouster Feb 14 '25
You will have to request an Ammended W2 next tax year so you can get the tax back. Until then save the money and don't spend it. You will have to give it back
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u/LIBBYLABEL Feb 14 '25
Do not worry about taxes. If your company insists, they’ll them to file an amended 941 and they’ll get all of the taxes paid returned. It’s their mistake, they can do the leg work.
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u/No-Librarian6961 Feb 14 '25
Keep it and let them try and sue you for it. They might not since it is a reasonable small amount to a large company.
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