I started a new job last June. Prior to starting, I received a cash signing bonus (to cover relocation costs). In reviewing my tax documents, I don't believe the signing bonus is reflected on the W-2's I received. I do see the payout amount listed on my employee profile in our workforce management system along with my salary and normal EOY bonus (which was taxed properly).
I have an inquiry out to my payroll department but am investigating how to handle in case they confirm it wasn't included.
From reading other threads here, it looks like this may not be uncommon. It's less clear to me, however, if I should self-disclose the income on 1099-MISC or 1099-NEC, or if it matters.
It looks like the other option is to use form 8919 and report it as unreported wages, but that might get my employer in trouble.
Advice?
Everything the employer gives you of value for your services, including a sign-up bonus, is supposed to be reported on your W-2 and is subject to regular withholding of income, social security and medicare tax. You should start by contacting the company and requesting a corrected W-2. If they refuse, you have to choose who takes the risk of an audit, you or them. You would be required by law to report the wages using form 8919 with code H. If you don't, and you are unlucky enough to be selected for audit, the problem will be on your head. Yes, the employer could also be investigated. I don't think they would be vulnerable if this was a one-time oversight, but if not, well, that certainly could be an issue for them.
Everything the employer gives you of value for your services, including a sign-up bonus, is supposed to be reported on your W-2 and is subject to regular withholding of income, social security and medicare tax. You should start by contacting the company and requesting a corrected W-2. If they refuse, you have to choose who takes the risk of an audit, you or them. You would be required by law to report the wages using form 8919 with code H. If you don't, and you are unlucky enough to be selected for audit, the problem will be on your head. Yes, the employer could also be investigated. I don't think they would be vulnerable if this was a one-time oversight, but if not, well, that certainly could be an issue for them.
Thanks.
To confirm, absent an amended W-2, I *must* report via form 8919 rather than 1099-NEC or 1099-MISC?
@variant wrote:
Thanks.
To confirm, absent an amended W-2, I *must* report via form 8919 rather than 1099-NEC or 1099-MISC?
Because it is wages, the correct action is to report it as wages with unpaid social security tax using form 8919. If you were to report it was miscellaneous income, you would be dodging/avoiding paying any social security tax, which is fraud by you. If you reported it as self-employment income on schedule C as if it was a side business, you would be paying 15% self-employment tax instead of 7.65% social security and medicare tax, and it would still be technically incorrect.
We see this situation somewhat commonly where an employer wants to pay a one time bonus for some reason and is either unaware of the rules, or deliberately avoiding them. By not issuing paperwork and not including the payment on your W-2 wages, the employer is (through ignorance or intention) avoiding paying their matching share of social security and medicare tax, plus possibly other taxes and fees like state taxes for unemployment insurance, workers comp, family medical leave, and so on. Other people have reported it as self-employment and paid the double social security and medicare tax rather than filing a form that might bring attention to their employer, but I can't advise on what risks you might have in that situation.