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    TonyaT's Avatar
    TonyaT Posts: 1, Reputation: 1
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    #1

    Nov 28, 2006, 04:12 PM
    1099 and W-2
    My boss issues bonuses as 1099 income and all other pay on our W-2's. Also, this year I received a raise in January but was not paid until April. Instead of including back pay due I was given a check that will be included in my 1099 for my bonuses this year. Is this legal? I am a full - time employee. Please advise.
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,301, Reputation: 7692
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    #2

    Nov 28, 2006, 05:43 PM
    The only difference is they are not holding any taxes out of the 1099 money, which merely means depending on how much those bonuses are, you have to be sure and have enough held out of your normal pay.

    Some companies do this, so it looks like you are getting more money in the bonus. For an example a 1000 bonus, that says 1000 looks like more than one that says 720 dollars, ( after tax)

    You just have to file on them, and pay the taxes due, or you may not get back as much as if they had been holding taxes out of the bonus money.

    I reduces the company part of the Social Security tax they pay 7.5 and of your part also, and in general I don't see your issue with it ?
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #3

    Nov 28, 2006, 06:17 PM
    Yes, it IS legal. Father Chuck covers the pertinent issues quite well.
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,301, Reputation: 7692
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    #4

    Nov 28, 2006, 06:46 PM
    Yes I had a company that used to do that to me, ( not that they would have worried about it being legal) my current company takes taxes and other withholdings out of my bonus checks, and they sure look a whole lot smaller.
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