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2nd Year Resident and Signing Bonus Question

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  • 2nd Year Resident and Signing Bonus Question

    I am a current second year IM resident looking to sign with a hospitalist group in the next few weeks. I have 3-4 additional interviews lined up and I am currently trying to figure out what makes the most sense for me and my family. Right now due to poor planning my wife and I have a loan at 8% for 40K that we used to pay off all our credit card debt. We have been making payments on it and have not racked up any credit card debt since using the personal loan to bundle all our credit cards into one and pay them down/off. My questions is- when I receive the signing bonus/residency stipend do I just put it all towards the loan and figure out taxes on the backend? Or are taxes taken out before that check/direct deposit even comes to me. I ask because the job I am most interested in is offering a $60,000 singing bonus and a $20,000 moving/housing allowance. The $60k is paid upon signing and the $20k is paid upon moving. But if my math is correct out of the $60k I will only see roughly $38-40,000 with my deductions and tax bracket at the time I sign.


  • #2
    In my experience the tax is taken out already.

    What are the stipulations that would cause you to have to pay back that bonus?

    20K is a generous moving allowance.  I thought the 10K I was offered was a lot and I bought everything under the sun to help with the move.  A large chuck of my stuff was stored and moved in Rubbermaid totes rather then cardboard boxes.  I still have a dozen totes in the basement slowly being filled with kid stuff.

     

    Welcome to the forum.  Hope you stay on the right track.

    Comment


    • #3
      Some signing bonuses are reported on a 1099 (no tax withholding) and some are reported on W2 (taxes withheld). Note that you will also be taxed on the $20k moving allowance and will not be able to deduct any moving expenses against it.

      As for what to do with the signing bonus, if you'll be an attending in 2020 (which doesn't sound correct to me if you're a 2nd yr resident) and will have the income to pay the taxes, then I'd go ahead and pay off the $40k (if this is paid with no withholding).

      Don't let the credit card debt drive your decision to go with the largest signing bonus, though. Good luck and welcome to the forum.
      Financial planning, investment management and CPA services for medical professionals | 270-247-6087

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      • #4
        You will have to pay the taxes eventually.  But I think more typically the signing bonus is not withheld if it is paid to you prior to your employee start-date.

        If not obvious, pay down the loan and worry about the taxes at year-end.

        $60k sounds like a pretty nice signon bonus.  Not a hospitalist though.

        Comment


        • #5




           

          $60k sounds like a pretty nice signon bonus.  Not a hospitalist though.
          Click to expand...


          Methinks it comes with a nice pair of golden handcuffs. I would read the fine print.

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          • #6







            $60k sounds like a pretty nice signon bonus.  Not a hospitalist though.
            Click to expand…


            Methinks it comes with a nice pair of golden handcuffs. I would read the fine print.
            Click to expand...


            Or it's very rural.  We've had a few friends with hospitalist sign-on's approaching that number and it's always been for 3-5 year contracts in rural/super-rural areas.  Only time there was anything written about paying it back, it was pro-rated based on how long they stayed.

            Two of them were climbing the contractual walls by year 2, ready to get out of the wilderness, but the rest seem to be happy with where they are.  Some places are willing to dish out the money for a few years of guaranteed service.
            I should have been a pair of ragged claws. Scuttling across the floors of silent seas.

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            • #7
              It would be best to structure the sign on bonus so that you can pay taxes now at a much lower bracket. Just my 2 cents.

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              • #8
                I had a similar sign on and think I got 38k as taxes were taken out already. Mine had zero contractual attachments beyond that I merely actually start.

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                • #9
                  I suppose the golden handcuff term is usually applied to 457f contributions. I'm basically referring to a bonus for years of service, which doesn't seem really like a bonus, but a promissory note.

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                  • #10
                    As mentioned above, read the fine print because there will be stipulations. Many groups like to throw some money at residents when they need the money the most but most groups will make that up on the back end. Just be careful.

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                    • #11
                      I would stash the taxes in a high yield savings if they weren’t withheld.
                      Moving, most moving reimbursement is “after the fact”.
                      The last thing you want is to have your former credit card debt loan paid off and not be able to move. Typically, the last half is cashiers check or similar.
                      You need to know the terms of that signing bonus thoroughly. Coupled with a non-compete and another move the chains are heavy and binding. Could be fine.

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                      • #12
                        It sounds like you've already addressed this but make sure the habits that got those credit card debts racked up are corrected. That will do you more good in the long run than a $60k sign on bonus.

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                        • #13
                          I am nervous for the OP taking a hospitalist job right out of residency with an $80k signing bonus.

                          There is something going on here. Maybe it's just rural and it's where the OP wants to be, but that is a helluva lot of money for an IM signing bonus.

                          The fact that they need to pay you $80k to get you to take the job would make me want to understand with great intimacy how this money is treated if you don't stay with them for 1, 3, or 5 years.

                          Comment


                          • #14




                            I am nervous for the OP taking a hospitalist job right out of residency with an $80k signing bonus.

                            There is something going on here. Maybe it’s just rural and it’s where the OP wants to be, but that is a helluva lot of money for an IM signing bonus.

                            The fact that they need to pay you $80k to get you to take the job would make me want to understand with great intimacy how this money is treated if you don’t stay with them for 1, 3, or 5 years.
                            Click to expand...


                            This is really not that big of a deal. Smart hospitals do this. It usually means rural and hard to recruit to. Ours was higher in the past, and its been great for my friends for years and so far so good (things change).

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                            • #15







                              I am nervous for the OP taking a hospitalist job right out of residency with an $80k signing bonus.

                              There is something going on here. Maybe it’s just rural and it’s where the OP wants to be, but that is a helluva lot of money for an IM signing bonus.

                              The fact that they need to pay you $80k to get you to take the job would make me want to understand with great intimacy how this money is treated if you don’t stay with them for 1, 3, or 5 years.
                              Click to expand…


                              This is really not that big of a deal. Smart hospitals do this. It usually means rural and hard to recruit to. Ours was higher in the past, and its been great for my friends for years and so far so good (things change).
                              Click to expand...


                              If it's above market then the OP needs to have a crystal clear understanding of why they are getting it -- and this is way above market unless I badly miss my guess.

                              The answer is almost certainly not that St. Wherever is a well-kept secret and an incredible place for a doc to work.

                              Comment

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