I received a w-2 and 1099-misc from my employer. They reported a christmas bonus on a form 1099-misc line 7 non employee compensation. When doing my taxes this makes absoultely no sense to report the bonus on this form. I would think it would be reported on the w-2 in wages, tips, and other compensation. When they gave the bonus no tax was taken out. Im very confused.

MukatA

This income is reported on schedule C. You can deduct the business related expenses on schedule C. Your net self-employed income from schedule C is subject to employment tax at 15.3% (if you file a resident tax return). For this, you attach Form 1040 Schedule SE.

ScottGem

The reason they reported in on a 1099-Misc WAS because no withholding was taken from it. Therefore you would report it as 1099 income on your return. I'm not sure if this would enable you to fill out a Schedule C or not. I don't think it would since you are not conducting a business.

MukatA

Non employee compensation means income as independent contractor or self employed person. You can deduct all the job related expenses on schedule C.
If there are no expense deductions, then this income can be directed reported as Other Income.

For W2 income, any job related (employee business related expenses) can be deducted only as itemized deduction.

ScottGem

But this was not non-employee compensation. It was a bonus from his employer that he got along with the W2.

AtlantaTaxExpert

The bonus SHOULD have been reported on the W-2.

Thomas should go back to the employer and see if the employer will correct the W-2 and cancel the 1099. Not likely, but all he can do is say NO!

If the answer is no, then the 1099 MUST be accounted for using Schedules C and SE, because it IS considered self-employment income by the IRS.