"Paul Thomas, CPA" <paulthomascpapc[at]bellsouth.net> wrote:
- quote -

What is a substitute W-2 & how does this work?

It seems to me that if the bonus was earned when this
fellow was an employee, it's W-2 income and his
employer ought to be paying the 2nd 1/2 of the SS
and Medicare tax, not him. He may possibly have an
unnecessary estimated tax penalty too. Also, wouldn't
creating a substitute W-2 (however that works)
indicate to the IRS that his old company is misclassifying
workers by paying them as ICs?

Surely the best thing to do here would be to first
contact the company and get them to correct their
mistake? Most of the answers in this thread put the
onus (and the extra tax) on the poor fellow who just
got his bonus!!

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Bill <an_ordinary_guy_158[at]hotmail.com> wrote:
- quote -

I don't see how this could possibly be self-employment
income. It was earned by working for an employer, and paid
by that employer. The exact date on which it was paid does
not change its characterization.

It's quite common for people leaving jobs to receive their
final paycheck (perhaps including a large amount for accrued
vacation, etc.) after their term of employment ends. It's
still employee (W-2) income.

Seth

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kapil.rajpal[at]qlogic.com (kp09) posted:

- quote -

You have two options: First, you can report the amount on
LIne 21, Form 1040, as "other income" and explain it was
delayed payment. This might be OK, if the amount were
relatively small ($500, as an example).

The second option would certainly be indicated if the amount
were very significant: Report it as self employment income
on Schedule C (or C-EZ, since no expenses would be
involved). That would lead to entries on Schedule SE to
calculate the Social Security and Medicare taxes required.

Of course, you quote no figures, so the answer is
conditional. For example, if your total income (including
the delayed bonus) were over $90,000, then the Social
Security tax should not be payable on the excess. If that
were the case, you would probably be wise to seek assistance
from a professional.

Bill

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kp09 wrote:

- quote -

It goes on Schedule C and SE (if it is more then $433).

Missy Doyle

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kapil.rajpal[at]qlogic.com says...

- quote -

There are two ways to report this; Form 4137 Social Security
& Medicare Tax on Unreported Tip Income shows income on Form
1040, line 7. I know it isn't tip income but the IRS seems
to like this. The other is to place it on Form 1040 line 21
Other Income. These are options, among others in Intuit
Pro-Series.

Cliffp

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"kp09" <kapil.rajpal[at]qlogic.com> wrote
- quote -

Schedule C or S-EZ. While not 100% correct, will cover it
on your part. The employer should have included this on your
W-2 and withheld Social, Medicare and the income taxes,
matching their half of the Social and Medicare tax.

Your only other option would be to create a Substitute W-2
and pay your taxes (and your half of Social and Medicare).

--
Paul Thomas, CPA
paulthomascpapc[at]bellsouth.net

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I need some help. I am stuck in a unique situation i.e. my
earlier company was supposed to give my bonus but it was
stuck due to some conflict. After I had left that company
they agreed and paid my bonus, but since I had already left
the company this amount did not show up in the W-2 form,
instead they sent me 1099-Misc. Now, this amount shows up as
a non-employee money and since it had no deduction for
social or medical taxes, I do not know how to handle it. Can
someone give me tips to handle this situation. Please note,
I had used TaxAct to fill my tax details, but it does not
provide me option to handle this problem. Any help would be
appreciated.

Thanks!

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