Expert: Arthur Naman - 4/29/2009

Question
I recently got a bonus inthe amountof 2,786.05 GROSS, the net from the bonus was 1,716.20. The bonus was wrong but they realized this after they paid it to me. My bonus should have been 928.68 before taxes so after taxes I should have got around 600.00. My company is making me pay back 185.00 a week for 10 weeks out of my paycheck.I got my first check this week and it is 389.79, I usually get 557.00 a week after all deductons. That is a difference of 167.75 per week for 10 weeks. that comes out to be 1,6775.00. I am paying back all but about 38.00 of the net bonus I recieved. Where is my 600 bonus if i am paying it all back to them. I do not understand and they can not explain it to me where I do.

Thanks
Angela

Answer
The issue is complicated by payroll taxes. If the gross bonus received was $2,786.05, then your company should get all that returned to them. Then you should receive your normal bonus of $928.68. Some of the errant bonus should come from you obviously, and the rest from the withholding, Federal and State. I feel you should consider to paying it all back at once, if you have the funds in your account. Why wait?

You will need to analyze your gross pay as reported on your paystub after taking into account the money returned to your employer. When all the corrections are made, you should have received your regular pay plus the $928.68 bonus, gross. Anaylze your pay using the gross numbers, not your take home pay because taking into account the payroll taxes is complex.

After doing that, you need to consider whether or not you have had the correct amount withheld. For that you may have to ask for help from someone in your local area because state and local taxes need to be taken into account in addition to federal taxes. You do not want to be in the position of having to make a large payment when your 2009 taxes are done.

Someone at your employer should be able to explain all this. Do not let tell you otherwise. Even if they use a payroll service, someone at your employer or at the payroll service will be able to explain this. This is their problem and their responsibility, not yours.

Let me know if you still need more help.