@Ashel56 wrote:
No. This is not for any extra hours of work done as a teacher. It is simply a salary supplement offered by an organization to help teachers with lower pay, for retention purposes, and to incentivize these teachers to obtain more education credits. This was formerly reported as a 1099-misc, but with new tax laws the entity issuing the salary supplements is required to file it as a 1099-NEC.
Because this was compensation for services performed, you are considered self-employed with respect to this income. You would report the income on schedule C and pay income tax and self-employment tax. Your business name can be your own name, your tax ID is your own SSN.
If you report this as "other income", you WILL get an IRS letter asking you to file a schedule C and SE and pay self-employment tax. You would have the option of replying to the letter with an explanation of why this is not considered "compensation for services performed."
Now, there is something called a SPIFF, or Special Performance Incentives for Field Force. Normally, this refers to incentives for selling cars, where the salesperson is an employee of the dealership, but they also get incentive payments directly from the vehicle manufacturer. The IRS has taken the position that these incentive payments are not self-employment income, are not reported on schedule C, and are not subject to self-employment tax. Here are some old forum posts on the topic.
https://ttlc.intuit.com/community/taxes/discussion/i-have-miscellanous-income-which-is-bonus-pay-fro...
https://ttlc.intuit.com/community/taxes/discussion/re-spiff-special-performance-incentives-for-field...
You might take the position that this is a similar incentive payment, and because you are not providing a service to the actual payor, this is not compensation, and should be reported as other income instead of self-employment. But this is a risk you will have to take, or consult with a professional tax advisor in your area. No one on this board is able to stand behind you at audit.
