Taxes on salary advance and bonus this summer for incoming associate?

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Taxes on salary advance and bonus this summer for incoming associate?

Postby Anonymous User » Thu Jul 09, 2015 11:57 am

My first does a salary advance and a small starting bonus that gets paid out midsummer. I forget the exact numbers, but it's something like 7500 loan, 3k starting bonus.

I'm figuring out my finances for the next few months and trying to get a sense of how much it'll be. Has anyone received theirs? How heavily was it taxed? The firm referred to it as an 'interest free loan,' which will be taken out of paychecks over the first year, if that makes a difference (so maybe it'll be all at once, and I'll get taxed throughout the year?).

I assume the bonus will be taxed.

Thanks,

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thesealocust

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Re: Taxes on salary advance and bonus this summer for incoming associate?

Postby thesealocust » Thu Jul 09, 2015 12:06 pm

The advance will probably be exactly as advertised - you will receive a check (or direct deposit) for $7,500. Then your paychecks will be lower by some amount over time as you repay that interest free loan (so say you are earning $10,000 per month and repaying the loan over 10 months, after all taxes have been removed, another flat $750 will be removed from the bottom line). No interesting tax consequences - just think of it as the firm giving you some of your after-tax pay early.

For the starting bonus, you will probably receive something like 60% to 75% of the stated amount of the bonus, with the rest being withheld as taxes. I'm not 100% certain of the tax treatment of bonuses though.

Anonymous User
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Joined: Tue Aug 11, 2009 9:32 am

Re: Taxes on salary advance and bonus this summer for incoming associate?

Postby Anonymous User » Thu Jul 09, 2015 12:07 pm

DC biglaw firm provided $7500, called it a stipend. After tax, it came out to a little over $5000.



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