1099-NEC provided for signing bonus. How to file.

[seanbelll1996]

Hi, 

I received a signing bonus from my current employer however, I received the bonus 6 months prior to my actual employment date. Due to this I received a 1099-NEC. I am unsure of how to file this as I am prompted to fill out a Schedule C. This does not seem relevant to me as I do not have a business and therefore none of the fields apply to me. 

Thank you,

[Deano_Bambino67]

All sign on bonuses are given without payroll tax deductions. They are considered as self employment earnings. You do not have to establish an LLC in order to earn an income and be required to pay taxes under employment laws. Unfortunately, 1099-NEC income is taxed at a higher rate than the salaried income. 

[Opus 17]

@Deano_Bambino67 

No.  And unfortunately, the expert is wrong as well, although no one caught it.

A sign on bonus should be reported on a W-2 as wages, and should be subject to income tax and employment tax withholding, because it is compensation for work performed, even though that work will be in the future.   There is a way to fix this in Turbotax, using either form SS-8 or a substitute W-2 form, depending on when the bonus was paid.  If the bonus was paid in 2023 and the employee started work in 2023 and recieved a w-2, then use form 8919 with code H.   If the bonus was paid in 2022 but the employee started work in 2023 and did not receive a W-2 for 2022, use form 4852 substitute W-2 form.

(However, in either case, first contact the employer and ask them to issue a corrected W-2.  Give them the chance to fix the mistake.)