I got both W2 & 1099-Misc (Box 7. Nonemployee Compensation) from my employer. When I entered 1099-Misc income in TurboTax, it produced a Form 4137 (social security & medicare tax on unreported tip income). The income reported on 1099-Misc is not unreported tip income, but performance based bonus given by my employer. I looked into IRS website, it points to Schedule C & SE, but these seems to be applicable for people who are self-employed/ own small business. It asks for details of business, profit/loss etc.

How do I report this income? Can I use Schedule C-EZ & SE?

Report the income on Schedule C-EZ and SE.

I do not understand why your employer did not include it in your W-2, since a bonus is considered part of your salary.

How much was your W-2 salary? If it is in excess of $87,900, the SE tax calculation has to be modified to assess only the Medicare portion of the self-employment tax, which assess at a rate of 2.9%.