Withholding for bonus income provided directly by a customer

[deviantparadigm]

I work a regular W-2 job.  As part of my duties, I support one of our clients when he puts on events.  Following each of his events, he likes to give out bonuses himself instead of routing them through my employer, which results in me receiving a 1099 from him at the end of the year (I guess it's actually a 1099-NEC and not a 1099-K; though he's been using an app to distribute the money for the last couple years, so I wasn't sure until I checked right before posting this).  I've been adjusting my W-4 withholding to account for the additional income, but what's the correct way to handle this situation?

[Bsch4477 · Accepted solution]

Adjusting your withholding is fine if it covers what is considered your self employment income. That income is taxed at 15.3 percent in addition to your regular marginal tax rate. 

[deviantparadigm]

Okay, thanks!