Accounting / Payroll / IRS question

[5918mike]

A company gives out a discretionary bonus every year, the checks are drawn at the end of the year and the bonus amount is added to the employees W2 for that year. When is the company required to give those checks to the employees?

This particular company has been known to wait 5 months to give them out to some people, some may get them in February, others in May.

People who pay attention to their finances and W2 noticed the difference between their paychecks amounts and can figure out that there is a difference (bonus check amount) but nobody wants to complain, and risk affecting their future bonuses.

Another question is once that check is cut and the amount added to the W2 can the employer ever retract it? So if that person quits are they still entitled to that check.

[turbobets]

So people are paying taxes on income they haven't received yet? Sounds fishy.

[big joe 1212]

If they quit or get fired before they get that bonus then the employer should issue a corrected W-2.

I wouldn’t say anything to your employer cause it may ruffle their feathers. Just think of it this way, the year you leave that employer you will not pay taxes on your last bonus.

[YellowCurious]

I worked for a company that did this. You have to be employed by the company when the check is given out. If you no longer work for the company, you will not get the check. For example, if the bonus is for 2018 and is paid in May 2019, you must still be working for the company in May of 2019 even though the bonus is for 2018. This prevents employees from ever leaving since they lose the bonus is they do. Some manager could be vindictive and fire an employee a few weeks before the bonus if they wanted to.