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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 14851
Experience:  15years with H & R Block. Divisional leader, Instructor
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Would like to know what would be tax implication on both me

Customer Question

Hello,
Would like to know what would be tax implication on both me and my friend -
An ex Employer of my friend owes $43k to my friend. His Employer says he can pay as bonus which will be highly taxable.
I have S corp and my friend wanted if I can help in this transaction. His ex employer can pay lumpsum to me or in 2 installments. I would like to know how I could help out my friend with the least tax or workarounds. My friend does not work for me. Question is how should I handle this transaction if possible. Please advise.
Thank you
Vikram R
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Hello

In truth you should not get involved at all.

Your friend does not work for you and you have not mentioned any connection to the ex employer that would require them paying your S corporation.

What you are being asked to do is "funnel" the money to your friend so neither the employer nor your friend would have to deal with tax being withheld.

It would still be taxable to your friend. Even if you agreed to do this and accept the payment then pass it along as a payment to your friend that does not avoid tax for anyone but the employer.

Your friend would have to pay all the FICA tax if they claimed this was a payment from your S corp to them as a non employee.

Do not get involved with their scheme to defraud (sadly that is what this would be even if your friend does not realize it).

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Expert:  Robin D. replied 1 year ago.

Please advise if you need more information or rating in a positive way is acceptable.

Expert:  Robin D. replied 1 year ago.

You can post below additional questions you may have.