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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15441
Experience:  15years with H & R Block. Divisional leader, Instructor
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Employee wants to offer yoga class during lunchhour. Any tax

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Employee wants to offer yoga class during lunchhour. Any tax downside to paying her for this service as a bonus as part of her W2 earnings, rather than setting her up as a contractor for this service? thank you.

Robin D :

Hello and thank you for using Just Answer,
As the individual is still your employee this could be added to their wages. Bonuses you pay to employees may be taxed in one of two ways. You can choose either the flat percentage method or the supplemental wage withholding method if the employee that receives the bonus had income taxes withheld for wage payments in the current or previous year.
If you add the wage to their regular pay then the withholding is calculated as usual.
If they are an employee for you already and you then issue them a 1099MISC in the same year the IRS may require information from you about the payments.


thank you. Your last statement, "If they are an employee...1099MISC" would not happen if we selected the "bonus" method of payment, is that correct? The 1099 situation would be if we paid her as a contractor?

Robin D :

That is correct, if you paid as a contractor they would generally receive a 1099MISC

Robin D :

If you wish to do a Bonus as an Employee then it is just added to their W2.

Robin D :

Your positive rating is always thanks enough.


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