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Even though you are not actually self employed, anything in box 7 of a 1099-Misc, is treated as self employment income, for tax purposes. So it will go on Schedule C. You will also file Schedule SE to pay social security and medicare tax, in the form of self employment tax.
Enter at the 1099-Misc screen and TurboTax will do the rest.
if you are an employee getting a w-2 it is totally wrong for the same employer to issue a 1099-misc for your bonuses. this can cause you tax problems. normally a 1099-misc get's reported on schedule C and expenses are deducted against it. you apparent;y are an employee and if the IRS realizes this, those expenses would be disallowed. (an employee cannot deduct any employee-related expenses) your employer can face significant penalties for failure to withhold and pay in the payroll taxes due on your bonuses. i say this on the basis that it only bonuses that the employer is not withholding on
here what the IRS says.
According to IRS guidelines, it is possible to have a W-2 employee who also performs work as a 1099 independent contractor so long as the individual is performing completely different duties that would qualify them as an independent contractor. Some legitimate examples are:
A Receptionist also owns a cleaning service business with their spouse. The company contracts with the team to perform janitorial services after hours for the office.
A Sales Manager also performs graphic design work for several local businesses after hours. The company contracts with the individual to create a new logo for the company.
A Maintenance Technician also owns a fabricating business of their own. The company contracts with the individual to fabricate equipment for the company.
A custodian who works for a county public school. The county views him as an employee and issues him a Form W-2 for these services. He also has a business that he owns and operates that provides snow plowing services on nights and weekends.
An employee owning their own business is not a requirement, but rather one of the factors to consider when determining if someone may be properly classified as an independent contractor. If you feel confident in the IRS criteria on the whole, you may classify their separate work as independent contractor work. But, be sure! It is widely believed among tax professionals that having a worker receive both a W-2 and 1099 increases the likelihood of an IRS audit.
you need to discuss your situation with a tax pro.
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