Received 1099-misc from my employer covering an end of year bonus (as part of my normal job) in box 3? Is this the correct form? The tax rate is quite astonishing.

[race93lt]

W2 income at $55000.  end of year bonus of $15000 reported on 1099-misc, box 3.  This caused a ~$5500 tax burden swing in the "I owe" direction.  No taxes were withheld from the 1099-misc.

[Patrice · Accepted solution]

Bonuses can quickly change one’s tax return. Bonuses are considered supplemental income by the IRS and held to a higher tax and withholding rate.  Internal Revenue Service goes to great lengths to categorize different types of income and treat them differently. Bonuses are another example of this. In the eyes of the IRS, bonuses are typically categorized as “supplemental wages.”  While bonuses are subject to income taxes, they don't simply get added to your income and taxed at your top marginal tax rate. Instead, your bonus counts as supplemental income and is subject to federal withholding at a 25% flat rate.

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