Anyone know how state taxes work for signing bonuses?

Hey everyone, I’m starting a new job in Minnesota next July and they’re giving me a sign-on bonus soon. I was sent a W4-MN form for state withholding, but I’m not sure if I should fill that out or if Illinois should withhold the taxes instead. Does anyone know how that works?

I had the same issue when I moved to a new state. From what I know, the state where you’re working when you earn the bonus usually handles the withholding. But I think you should talk to a tax pro just to be sure.

@Tobin
Yeah, that makes sense. I’ll probably check with a tax person like you said. Thanks!

@Tobin
IDK but maybe it’s based on where you’re living when you get paid? :man_shrugging:

Nevin said:
@Tobin
IDK but maybe it’s based on where you’re living when you get paid? :man_shrugging:

Could be! But from what I’ve seen, most places care more about where you’re physically working when you ‘earn’ it.

If you have to repay the bonus if you quit, it might not be counted as earned until you start working in Minnesota. That’s how my bonus worked when I changed jobs.

Ash said:
If you have to repay the bonus if you quit, it might not be counted as earned until you start working in Minnesota. That’s how my bonus worked when I changed jobs.

That’s helpful! I do have to repay it if I quit, but I don’t plan on that happening. Still good to know!

I think you’ll have to file a non-resident tax return in Illinois and get a credit for taxes paid there when you file in Minnesota next year. I had to do something similar before.

Wylie said:
I think you’ll have to file a non-resident tax return in Illinois and get a credit for taxes paid there when you file in Minnesota next year. I had to do something similar before.

Wait, what’s a non-resident tax return? :thinking:

@Rowan
It’s basically when you work in one state but live in another. You file taxes for the state where you worked but weren’t a resident. You might get credit for taxes paid in that state when you file in your home state.

@Rowan
Ohhh got it, thanks for explaining! :sweat_smile:

Honestly, taxes confuse me so much. I’d definitely just hire a tax preparer to figure it out lol.

Daire said:
Honestly, taxes confuse me so much. I’d definitely just hire a tax preparer to figure it out lol.

Same here lol. I’m probably going to get some professional help too.