Expert: Shirley McAllister, CPP, PHR - 2/20/2008

Question
QUESTION: Hi, Shirley.  I have to pay back my signing bonus because I left the company I was working for after just 2 months.  The signing bonus was $5,000 and I received $2,934.44 after taxes.  My last paycheck of $2,065.56 was withheld to pay back a portion of what I owed.  According to my calculation I owe the difference, which is $868.88.  However, according to the invoice I received I owe $1,747.45.  The invoice description reads: signing bonus recovery less taxes ($2,934.44-$1,186.99=$1,747.45).  Why is the calculation not $2,934.44-$2,065.56=$868.88?  I have contacted a payroll representative from the company multiple times but they have not been able to explain it to me.  Please help.



ANSWER: First of all they should not have withheld the total amount of your final paycheck as it is not legal to do so they cannot withhold what would put you below minimum wage.

However it was done.

Was the 2,065.56 of your final paycheck the gross amount or the net amount? If the 2,065.56 is the gross amount they probably withheld your taxes from the amount and the net of 1,186.99 was applied to your signing bonus. Do you have a payslip for the final check that was applied toward the signing bonus.

If you do check to see what amount was put toward the bonus. My guess is that taxes were withheld and the balance of 1,186.99 was put toward the bonus .

Shirley

---------- FOLLOW-UP ----------

QUESTION: Hi Shirley,
I don't have my final pay stub but the payroll department did e-mail me a summary from their payroll program:
Sign Bonus      -2,065.56
Medical credit       44.30
Dental Credit      4.62
Regular         1,153.85
Vacation Pay Off   862.79
The credits and regular pay total $2,065.56.  From the information above, do you still think that it was the gross amount?

I am still confused as to why they would list the $1,186.99 as taxes on the invoice if it is the net amount of my last pay check.  The invoice reads signing bonus ($2,934.33) less taxes ($1,186.99) totals $1,747.45 owed.

Is it possible that they applied $2,065.56 toward the initial bonus amount of $5,000 instead of the amount I actually received after taxes?  If so, does that mean that I am paying taxes on the bonus twice?  

Answer
They took the 5,000 signing bonus  =       5,000.00  Gross Bonus
Subtracted the 2065.56 from final ck =     (2065.56) Pmt final ck
Balance Due after final check          2934.44  Balance Due
They subtracted the taxes you paid         (1186.99) Paid taxes
Balance Due          1747.45  Balance Due


I don't know where they got the 1186.99 figure. If your bonus was 5,000 and your taxes were 1186.99 than the net should have been 3813.01. You need to find out what else they withheld if your net bonus amount was only 2934.33.

Shirley