SPIFF
SPIFF (Special Performance Incentives for Field Force) payments reported on Form 1099MISC; (1) are not treated as wages, (2) are not subject to federal income tax withholding, social security, Medicare, or federal unemployment tax, and (3) are not considered to be self employment income and, therefore, are not subject to self employment tax. https://www.unclefed.com/IRS-Forms/2005/p3204.pdf
In TurboTax, Enter at:
- Federal Taxes tab
- Wages & Income
Scroll down to
-1099-Misc and Other common Income
- Income From 1099-Misc
On the follow up screen :Does one of these Uncommon situations apply" on the drop down list, check “This was a Manufacturer's incentive payment”
This will put it on line 8z of Schedule 1.
A SPIFF (Special Performance Incentives for Field Force) is a small, immediate bonus for a sale. Typically, "spiffs" are paid, either by a manufacturer or employer, directly to a salesperson for selling a specific product.
IRS Publication 3204 discusses spiffs for the auto industry, however the principal should apply to any spiff. The remainder of this post is from the document:
Automotive Manufacturers’ Incentive Program to Vehicle Salespersons
Did you know. . . that incentive payments paid by an automotive manufacturer are taxable income, whether made directly to individual sales persons or through a dealer?
Reporting Incentive Payments
Follow the filing guidelines below when reporting incentive payments you received from a manufacturer. If someone other than yourself prepares your tax return, make sure the preparer is aware of these guidelines:
- Report the income on page 1 of Form 1040, U.S. Individual Income Tax Return under Income on the line titled “Other Income”. (currently Schedule 1 line 8z)
- Do not report the income on Schedule C (Form 1040), Profit and Loss from Business, because recipients of these payments are not engaged in an individual trade or business and are therefore not self employed. Similarly, no expenses may be taken on Schedule C to offset incentive payment income.
