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Missing 1099-NEC for payment I never received

My employer in the past has paid a bonus, not withheld taxes, and issued me a 1099-NEC for it.  For tax year 2023 I did not receive the bonus, or the 1099-NEC and I filed my taxes without it.  My return was accepted as filed without any mention of the missing 1099-NEC by the IRS.  Now halfway through 2024 I found out they did cut a check to me but it got lost, and they did mail a 1099-NEC, but sent it to an old address.  They are making this right, re-issuing a new check, and filing a corrected 1099-NEC showing $0 for 2023.  The reissued bonus check will be reflected on a 1099-NEC for 2024.

 

Do I need to file an amended return with the corrected 2023 1099-NEC for $0?  It won't affect my taxes or income since it is being corrected to $0 and my return didn't include it originally.

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Accepted Solutions

Missing 1099-NEC for payment I never received

No, but that't not all.

 

First, regarding the 2023 1099-NEC.  The IRS accepted your return because acceptance only covers very basic facts (name, SSN, all the math is correct, all the proper boxes are filled out).  It can take more than a year for the IRS to catch up to missing or mis-matched income.  So the IRS could still send you a letter for the unreported income, depending on when the letter is prepared and when the corrected 1099 is processed.  If you get a letter proposing a deficiency, you can respond with a letter explaining the situation and enclose copies.  You don't change your 2023 tax return because what was reported was correct, and any bonus that is paid in 2024 is taxable in 2024, no matter when it was earned.

 

However, as regards the payment of a bonus in general, and payment of a bonus in 2024 (regardless of when it was earned):

 

ALL money paid to you by a W-2 employer as compensation for your work MUST be reported on your W-2 and is subject to withholding of social security, medicare, and state and federal income taxes.  By paying on a 1099-NEC, the employer is breaking the law, and either accidentally or on purpose, trying to make you pay 15% self employment tax for social security and medicare instead of withholding 7.65% from you and paying a matching 7.65% themselves.

 

Start by pointing this out to them.  Keep copies of your correspondence, especially if they refuse.

 

When you file your return, if they do not put the income on your W-2, there is a procedure when entering the 1099-NEC to indicate "I received this from my regular employer and it should have been on my W-2."  Turbotax will prepare a corrective form so you pay the correct social security and medicare tax and not double.  The employer may be investigated (if the IRS is not too busy auditing someone else.)

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7 Replies

Missing 1099-NEC for payment I never received

No you do not need to amend for that.  Just report it on your 2024 return next year.  Don't forget you might also have the real 2024 bonus too.  So you might have two 1099NEC or they will report both on a single 1099NEC.  

Missing 1099-NEC for payment I never received

No, but that't not all.

 

First, regarding the 2023 1099-NEC.  The IRS accepted your return because acceptance only covers very basic facts (name, SSN, all the math is correct, all the proper boxes are filled out).  It can take more than a year for the IRS to catch up to missing or mis-matched income.  So the IRS could still send you a letter for the unreported income, depending on when the letter is prepared and when the corrected 1099 is processed.  If you get a letter proposing a deficiency, you can respond with a letter explaining the situation and enclose copies.  You don't change your 2023 tax return because what was reported was correct, and any bonus that is paid in 2024 is taxable in 2024, no matter when it was earned.

 

However, as regards the payment of a bonus in general, and payment of a bonus in 2024 (regardless of when it was earned):

 

ALL money paid to you by a W-2 employer as compensation for your work MUST be reported on your W-2 and is subject to withholding of social security, medicare, and state and federal income taxes.  By paying on a 1099-NEC, the employer is breaking the law, and either accidentally or on purpose, trying to make you pay 15% self employment tax for social security and medicare instead of withholding 7.65% from you and paying a matching 7.65% themselves.

 

Start by pointing this out to them.  Keep copies of your correspondence, especially if they refuse.

 

When you file your return, if they do not put the income on your W-2, there is a procedure when entering the 1099-NEC to indicate "I received this from my regular employer and it should have been on my W-2."  Turbotax will prepare a corrective form so you pay the correct social security and medicare tax and not double.  The employer may be investigated (if the IRS is not too busy auditing someone else.)

Missing 1099-NEC for payment I never received

Also, as regards to a bonus paid on a 1099-NEC in 2021 or 2022, you could file amended returns for those years to report the bonus as "wages not properly reported on a W-2", instead of self-employment, and get back half your self-employment tax.  It would be form 8919 with code H.  It's too late to amend 2020 or earlier. 

Missing 1099-NEC for payment I never received

Thank you for the answer, and the additional information!

Missing 1099-NEC for payment I never received

Thank you for the answer!

Missing 1099-NEC for payment I never received

2021 can still be amended.  The deadline is April 15, 2025.

Missing 1099-NEC for payment I never received


@NCperson wrote:

2021 can still be amended.  The deadline is April 15, 2025.


I meant 2020.

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