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posted Jul 3, 2020 9:37:43 AM

As a 1099 - self employed, how can I deduct bonuses I received in the 22% bracket vs the 30% self employment bracket? I have looked everywhere for where I can include thi

this... and not seeing any place for this special income, bonus. Please help! Thank you!

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1 Best answer
Level 15
Jul 3, 2020 1:59:59 PM

If you are an independent contractor or self-employed business, any money you receive for performing a service or providing a product is your gross business income and is subject to regular income tax plus self-employment tax.  There is no way to say that a bonus is "unearned income" and should be taxed differently. 

 

(There is a rare exception for certain sales people who are employees of a company -- like a car dealership -- and receive bonuses ("spiffs") direct from the car manufacturer.  That does not sound like your situation.)

2 Replies
Level 15
Jul 3, 2020 9:41:16 AM

Income is just income.  It doesn't matter why you got it.  Is it on a 1099Misc?  And there isn't a 30% bracket for self employment.  

 

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment. You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400. The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare. So you get social security credit for it when you retire.  The self employment tax is separate but in addition to the regular income tax on your net profit.

Level 15
Jul 3, 2020 1:59:59 PM

If you are an independent contractor or self-employed business, any money you receive for performing a service or providing a product is your gross business income and is subject to regular income tax plus self-employment tax.  There is no way to say that a bonus is "unearned income" and should be taxed differently. 

 

(There is a rare exception for certain sales people who are employees of a company -- like a car dealership -- and receive bonuses ("spiffs") direct from the car manufacturer.  That does not sound like your situation.)