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I received a job offer with sign on bonus, which will be paid in the first month. There is a condition to it: if I leave within 1 year, I need to return the full bonus. If I leave within the second year, I need to return 50% of it.

However, if I accept this offer, I will receive the sign on bonus after tax. So if I return to them, I think I will return the amount after tax, is it right?

Of course, the recruiter is the right one to clarify about this problem. But I don't want to create an impression that I prepare to leave even before starting.

I'm in the US, where tax is very complicated.

closed as off-topic by gnat, solarflare, BSMP, Twyxz, Jenny D Oct 25 '18 at 7:34

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  • 1
    Will you be able to amend your tax returns to retrieve the tax on the bonus? – Patricia Shanahan Oct 24 '18 at 21:30
  • @PatriciaShanahan That's what I don't know. I would like to ask all possible situations for this problem? – qsp Oct 24 '18 at 21:53
  • @JoeStrazzere thanks, that question is very related to mine. But it doesn't have an answer as well. Is it useful to post my question there? – qsp Oct 25 '18 at 0:01
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However, if I accept this offer, I will receive the sign on bonus after tax. So if I return to them, I think I will return the amount after tax, is it right?

That would be unfair to both you and them. They would be out the amount you paid in taxes and you would unfairly have the tax benefit of having repaid them. See IRS Publication 525 under "Repayments". You actually recompute your past year's taxes as if you didn't get the bonus and take the difference as a credit.

Personally, I wouldn't want the hassle of having to deal with this and would try to negotiate something simpler. Perhaps a smaller signing bonus followed by a retention bonus after one year.

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If you are working with a recruiter, ask them. Their job is to fill the position, and they will typically be far more interested in closing the deal than how long you plan to stay.

They can negotiate a different option for you if you don't like the structure of the sign-on bonus, and they can answer your questions without having to let the possible employer know that you were the one with the question. You don't typically make as much money going through a recruiter, because they earn a commision on your hiring, but things like this are among the advantages of doing it.

  • "they earn a commision on your hiring" -> is this only applied to third-party agent? The recruiter I'm working with is the company's employee. – qsp Oct 24 '18 at 21:52
  • Even external recruiters wouldn't want you to leave too soon. It would damage their relationship with the company, especially if it comes out that they were asked a question like this, and they may not get their full paycheck. – Dukeling Oct 24 '18 at 22:06
  • that is true, but unless you tell the recruiter "I plan to leave in X months", they will generally send you as an applicant anyway to improve their odds of a closure. – Nosajimiki Oct 24 '18 at 22:10
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OK, you have a bigger problem than you realize.

Your employer is confusing a sign-on bonus with a retention bonus. They are different things, for different results.

A sign-on bonus is usually paid within 60 days of starting, and is yours no matter what. A retention bonus is something that is paid AFTER a period of time has elapsed with you employed.

A sign-on bonus is to get you in the door.

A retention bonus is to keep you there.

They are not the same thing.

As for the tax implications - you should seek professional, licensed advice, and not Internet Advice™.

  • Because to call it a sign-on bonus when it's actually a retention bonus is deceptive. I would walk away from someone who tried this sleight-of-hand on me. – Wesley Long Oct 24 '18 at 23:17
  • @JoeStrazzere - Every once in a while, we disagree. Guess we found one, here. – Wesley Long Oct 24 '18 at 23:23
  • It's not the name so much as the trickery. What the company is offering is essentially an advance on a retention bonus, and calling it a sign-on bonus. Presumably they are doing this to compete with other companies offering ACTUAL sign-on bonuses. – Wesley Long Oct 24 '18 at 23:26

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