1099-MISC

Forum|Forum|3 years ago
April 9, 2023
1 reply
1 view

Hi everyone,

I received a signing bonus from a future employer and received a 1099-MISC with box 3 filled out. How would I go about in answering the following questions:

Did the Signing Bonus involve work that's like your main job?

Did the Signing Bonus involve an intent to earn money?

Everytime I answer yes to one of these questions it makes it seem like I own a self employment business. Thank you for your help.

PattiF

Level 15

This is considered self-employment income. The company that gave the bonus to you reported it on a 1099-MISC instead of a W-2 where bonuses are usually reported.

If you received a 1099-MISC, I assume you did not pay any Federal, State, Medicare, or Social Security tax on your sign-on bonus. While the IRS may not consider bonuses regular wages, they are still regarded as supplemental wages and are subject to Federal, State, Medicare, and Social Security taxes. Although you're not self-employed, the self-employment entry allows you to enter the income, and the calculation occurs for Federal, State, Medicare, or Social Security tax.

Since the company issued you a 1099-MISC, you can write off expenses related to the income received. Were there any travel expenses related to getting the job?

Please see this from TurboTax How are Bonuses Taxed?

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Shen924Author

Level 2

There were no traveling involved. I won’t start this job for a few months. This future employer is different from my current. How Would I answer to both of these questions?

Hal_Al

Level 15

Did the Signing Bonus involve work that's like your main job?

Did the Signing Bonus involve an intent to earn money?

You answer yes, both questions. This is an equivalent to a salary bonus. As such, social security and Medicare tax need to be paid, in addition to income tax. The way you do that is as "self employment tax", by filing Schedule C and Schedule SE