Ask Experts Questions for FREE Help !
Ask
    kasamba's Avatar
    kasamba Posts: 14, Reputation: 1
    New Member
    		  
    #1

    Jun 27, 2012, 07:46 AM
    Referral bonus from an organization (where I don't work)
    Hi Atlanta Tax Expert,

    I had a question regarding my tax liability (I am on H1B status in USA) for accepting referrals from a company. I would appreciate your answers. I have from time to time come to this forum seeking your advice and would thank you for raising my awareness.

    I had introduced an employee to a company and they are giving me a referral for that. I was expecting a check of some sort but they recently sent me some paperwork to sign
    1) Network partnership agreement stating they are entering into an agreement with me (an individual) as a partner etc..
    2) They gave me a W-9 form and this is what got me thinking about my tax liabilities and also if I am supposed to accept any referrrals of this sort being on H1B status. They will mail me payments . Do you think I will get a 1099 at the year end to file taxes?

    Let me know what your thoughts are and If a person on H1B can get such payments? (I am guessing its OK because I get 1099-INT, DIVs from my stock broker and banks).

    Appreciate your answers.

    Thank you!
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Jun 27, 2012, 08:02 AM
    You will probably get a Form 1099-MISC with the amount entered in Block #3 (Other Income). If so, you will report that income on Line #21 as "Other Income" and pay federal and state income taxes on the income. However, you should be exempt from any self-employment taxes.

    If the Form 1099-MISC has the income listed in Box #7 (non-employee compensation), then you will need to file Schedule C and probably Schedule SE to calculate and pay self-employment taxes.
    kasamba's Avatar
    kasamba Posts: 14, Reputation: 1
    New Member
    		  
    #3

    Jun 27, 2012, 08:26 AM
    Quote Originally Posted by AtlantaTaxExpert View Post
    You will probably get a Form 1099-MISC with the amount entered in Block #3 (Other Income). If so, you will report that income on Line #21 as "Other Income" and pay federal and state income taxes on the income. However, you should be exempt from any self-employment taxes.

    If the Form 1099-MISC has the income listed in Box #7 (non-employee compensation), then you will need to file Schedule C and probably Schedule SE to calculate and pay self-employment taxes.
    Thank you for your repsonse ATE.
    Another follow-up I have on the above reply.
    If the income is reported in Box 7, and I have to pay self-employment taxes, is it legal for a H1B individual to do this as H1Bs cannot be self-employed. Please explain how it works if you are on H1B status.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #4

    Jun 27, 2012, 08:39 AM
    This is NOT true self-employment income; it is referral income, which IS legal for H-1B visa holders.

    If you discuss this with the company paying you're the referral bonus to MAKE SURE they put the amount in Block #3 of the Form 1099-MISC, you will avoid the self-employment tax issue.
    kasamba's Avatar
    kasamba Posts: 14, Reputation: 1
    New Member
    		  
    #5

    Jun 27, 2012, 09:23 AM
    Quote Originally Posted by AtlantaTaxExpert View Post
    This is NOT true self-employment income; it is referral income, which IS legal for H-1B visa holders.

    If you discuss this with the company paying your the referral bonus to MAKE SURE they put the amount in Block #3 of the Form 1099-MISC, you will avoid the self-employment tax issue.
    Thank You. I will certainly talk to them about doing it that way.
    Appreciate your input on this.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #6

    Jun 27, 2012, 10:27 AM
    Glad to help!
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

How do you report income when you work for a non-profit organization? [ 3 Answers ]

I work for a pharmacy delivering meds to nursing homes, there are no taxes deducted from my pay check because the company is exempt from taxes. How should I report my earnings to the IRS?

Using GM as the work organization research the elements of business. Must be 4-5 page [ 1 Answers ]

Using GM as the work organization research the elements of business. Must be 4-5 pages in length with one PERT chart and one Gantt chart. Describe the organization’s basic legal, social, and economic environments Describe the organization’s managerial, operational, and financial issues...

F-1 student with referral bonus on 1099-MISC [ 1 Answers ]

Hello everyone, I'm currently a F-1 student here. Last summer I helped my friends moved into the apartment complex where I lived. The leasing office paid me $700 as a referral bonus and now I received a 1099-MISC from them. The $700 is reported on Box-7. I know I'm supposed to report this part...

Charity/donation vs. Work for non profit organization [ 2 Answers ]

Hi If I provided a work for non profit with a discounted rate (approx. 20%), can I put Down the discounted amount in Charity/Donation sector? This was how I and My non-profit client negotiated the pricing when we began the work relationship, And I would like to check if this is really...

Referral bonus [ 3 Answers ]

Ihave received a referral bonus of 2000 this month. My friend wanted to split this bonus 40/60. 40 percent for me after taxes. Now, am I not losing money on this? Thanks.

View more questions Search