What is a typical biglaw first year stipend/salary advance? Forum

[satorugojou]

Can anyone break down how the taxes work exactly? Would appreciate it, thank you!

[Anonymous User]

Can anyone break down how the taxes work exactly? Would appreciate it, thank you!

For salary advances, someone ITT mentioned it earlier but I believe it is taxed at the ordinary rate.

For stipends, at least for my firm, it is treated as supplemental income and the firm is required to withhold the flat bonus rate of 22%. Given that your stub year income will likely not exceed ~$89,000, which would place you in the 22% marginal bracket, this means you likely will not owe further federal taxes on that stipend at year end. Please feel free to correct if I am wrong. For reference, see https://www.biglawinvestor.com/bonus-tax-rate/

[Anonymous User]

My advance was not taxed. You pay it back with post-tax earnings.

[Anonymous User]

Anyone know how V&E handles stub years? Do they pay stub bonuses?

[Anonymous User]

Fenwick gives $15k stipend for bar prep/fees/living expenses and a moving stipend based on distance that caps out at $8k.

Sucks that after taxes I got a little under $12k.

[Anonymous User]

Fenwick gives $15k stipend for bar prep/fees/living expenses and a moving stipend based on distance that caps out at $8k.

Sucks that after taxes I got a little under $12k.

Same. It's a generous stipend, but the way they calculated the tax withholdings is not great. We got taxed as if we make our full stipend every pay period.

[Anonymous User]

For Ropes NY: 10K advance (in form of a loan), 5K relocation (taxable and only applies if attended law school >50 miles from NY office), and bar course paid directly (taxable)

[Anonymous User]

For Ropes NY: 10K advance (in form of a loan), 5K relocation (taxable and only applies if attended law school >50 miles from NY office), and bar course paid directly (taxable)

I'm assuming the loan was a forgivable loan and the forgiveness was also taxable as COD income?

[Anonymous User]

For Ropes NY: 10K advance (in form of a loan), 5K relocation (taxable and only applies if attended law school >50 miles from NY office), and bar course paid directly (taxable)

I'm assuming the loan was a forgivable loan and the forgiveness was also taxable as COD income?

Now that I think about it, our SA program had a "loan" that we paid back out of our first check. For full-time I think they called it an advance. Why they structured it as a loan I have no idea -- it had to be paid back with after-tax income anyway.

[jsnow212]

Here's the summary:

Most firm give cash advances. Advances are paid back with no interest from each paycheck (after-tax) when you start. Most firms take a set amount per paycheck, until the advance is paid back in full.

Some firms give a stipend, this does not need to be paid back and is taxed at the time of receipt. Most firms that give stipends do not give a stub bonus. A stub bonus is just the pro-rated first year bonus for the amount of time you work the year in which you graduate from law school.

Nearly all firms pay for bar prep, bar fees, lodging/travel if you don't live near the test site. These are all considered taxable income.

Same with firms when they pay for moving costs. Taxable income.