LenaH
Employee Tax Expert

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If bonuses are reported on a 1099-MISC in Box 3, then you will still need to pay the uncollected Social Security and Medicare tax, as well as the income tax. This could be why it keeps populating under a Schedule C and adding self-employment tax (which will end up being your portion of the Social Security and Medicare on this income). 

 

The IRS classifies bonuses as supplemental wages, along with severance pay, taxable fringe benefits, vacation pay, back pay, and overtime. Supplemental wages are anything other than your husband's regular pay.


Typically, bonuses are added to a W-2. However, there are different withholding methods for supplemental wages that the employer can consider, which are discussed in IRS Publication 15.

 

Per the IRS, regardless of the method employers use to withhold income tax on supplemental wages, supplemental wages are subject to Social Security and Medicare taxes. 

 

 

@Pennie52

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