@Carl wrote:
Most likely, the $75K will be included in box 1 of your W-2. But you *NEED* to ask this question to the company, as they might issue you a physically separate 1099-NEC for the amount. If the amount is a commission payment, then in addition to regular taxes, you'd also pay the additional 15.3% self-employment tax on the amount.
I disagree about the amount of tax owed. If the company does not withhold tax, and issues a 1099-NEC, the taxpayer will only need to pay 7.65% for social security and medicare, not 15%. They will file form 8919 with code H with their tax return (for "I received a Form W-2 and a Form 1099-MISC and/or 1099-NEC from this firm for 2021. The amount on Form 1099-MISC and/or 1099-NEC should have been included as wages on Form W-2.")
Note, I am assuming the taxpayer is correct when they say "my employer is paying a bonus." If the employer pays a bonus to a W-2 employee, it must be on their W-2 and is subject to withholding, even if is a bonus or commission. However, if this is a commission paid by a manufacturer as a reward for meeting a sales quota, this would be considered a "SPIFF" and the rules are different. In this case, it would not be on the W-2 from the employer, and the 1099-NEC would come from the manufacturer. The taxpayer should pay estimated income tax of 25% for income tax and 7.65% for social security and medicare (SPIFFs are not subject to self-employment tax because they are not self-employment, even if the payer uses a 1099-NEC instead of a 1099-MISC.)
If this is a SPIFF, you may want to ask for more details.
