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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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We issued a bonus to an employee last year and gave m a 1099

Customer Question

Hello, My name is A ***** *****, and we issued a bonus to an employee last year and gave him a 1099 miscellaneous. His tax advisor told him that we should've checked off on box 3 (not 7) in order for him to not have to pay self employment tax on it. I'm not so certain she is correct. how do I rectify this if it needs to be done?
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Submitted: 9 months ago.
Category: Tax
Expert:  Lev replied 9 months ago.

If the person is your employee - the bonus is classified as wages and MUST be reported on W2 form.
Reporting the bonus on form 1099misc is not correct - regardless in which box it is reported.

Expert:  Lev replied 9 months ago.

Here are specific instructions from form 1099misc - see page 8 - right column

https://www.irs.gov/pub/irs-pdf/i1099msc.pdf

Payments not reported in box 7. Do not report in box 7:

an employee's wages, travel or auto allowance, or bonuses and prizes (report on Form W-2);

.

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