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Posted by Tony Cox on April 14, 2006, 3:45 am
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> tc@coxrt.com (Tony=A0Cox) posted:
>>>> 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.
>>>> <elided>
>>> 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).
>> 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!!
> You've made a fair point.
>
> Speaking for myself only (but, I suspect for others as
> well), the answer was keyed to the OP's request for "some
> tips on how to handle this situation" ... and the timing of
> the query -- just a few days before the deadline for filing
> -- led me to focus on pragmatic solutions, rather than the
> _ideal_. As you point out, the _ideal_ solution would be to
> contact the former employer, and have them redo the paper
> work. However, that would require a return of sufficient
> funds to cover the OP's share of SS and Medicare deductions,
> and some significant time would be required.
Well, I wasn't getting at you personally. Its just that
it seemed to me everyone was missing the obvious.
Why not pay what's owed and file for an extension?
Anyway, what is a substitute W-2?
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