Sign on bonus from company different from my W2 form

[ladybug-marienka]

I have a sign on bonus on a 1099 MISC from an employer that I will be starting with in September. My contracts are already signed but I am not CURRENTLY working for them. DO I file it as a bonus from my employer or from someone other than my employer? To clarify I am currently working for another group. My W2 is with them. I don't have a W2 from the company that sent me the 1099-MISC.

[DDollar · Accepted solution]

Their are differing opinions on whether a signing bonus should be reported on a W-2 or a 1099.  Since yours was reported on a 1099 you have two choices.  First, you, you can report it as income subject to self-employment tax.  This will cost a little more because of Self Employment tax, but it is the easier of the two ways.  This method does provide you the option of contributing to to a self-employed retirement plan if you want.

The second way is to reporting using Form 8919, which is used to report wage income that was incorrectly reported on Form 1099 or not reported.  It will require you to pay FICA and Medicare taxes on the payments (remember - you would have paid them anyway) but not the matching employer share.  You will also have to prepare Form SS-8 (a request for determination on employee vs. contractor status). Perhaps the biggest drawback is that you will probably upset your new employer, because the IRS may contact them about the matter, and no one likes being contacted by the IRS!

The signing bonus has nothing to do with, and should not be reported in any way as being from your current employer.

[ladybug-marienka]

OK thank you! That was very helpful. I know they aren't my current employer. I just wasn't sure if they still qualified as an employer (as in I would have 2 employers at this time) or not yet.

[rhinkjr1]

So you're saying an employer can cause a third party to pay an employee's bonus and avoid the employer's portion of the tax liability?