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Returning Member
posted Mar 20, 2022 11:41:14 AM

Classifying brokerage bonuses

What can I do to make sure that my brokerage bonuses are classified correctly? I believe that they shouldn't be classified as self-employment income. 

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1 Replies
Expert Alumni
Mar 20, 2022 12:46:33 PM

A brokerage bonus or promotion is typically treated the same way as interest earned in the account. If the account is a regular taxable account, the bonus will be taxable. I expect the year-end 1099-INT will include this bonus.

 

If the account is a traditional IRA, there won’t be a 1099 and therefore it won’t be taxable in the current year. But because the bonus stays in the IRA and it grows tax-deferred, eventually when you withdraw the money after you retire, the money will be taxable at that time.