If bonuses are reported on a 1099-NEC, 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 is populating under your 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 pay is anything other than your 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.
To enter your 1099-NEC:
- Open your return.
- Search for 1099-NEC with the magnifying glass tool at the top of the page.
- Click on the Jump to 1099-NEC link at the top of the search results.
- Click Add a 1099-NEC.
- Enter the information as shown on your form.
- Follow the on-screen instructions.
After you enter your 1099-NEC, it should flow through to a Schedule C.
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