Wondering if the medical group I currently worked for handled reporting of my signing bonus properly - I started in Nov 2002 and received a $5000 signing bonus as stipulated by the contract in Dec 2002 - this income was reported on a 1099 Misc for 2002.

In 2003, I received an end of the year bonus from the group, but the 2003 bonus was reported as regular income (with Soc Sec, etc withheld) and reported on the 2003 W2.

My question is why is there a difference between how each bonus was reported? I already started employment with the group at the time of the signing bonus, so shouldn't that have also been reported on a W2 as employee income rather than on a 1099?

Thanks!

John Martinez

Zip Code: johnmartinez@mac.com

The logic I've seen used for paying signing bonuses as non-employee compensation (Form 1099) is that the payment is not for your services, but rather for your agreement to become an employee.

I'm not sure I buy the logic, and the distinction is not clear to me either. It seems to me that is a payment for your future services, and should be reported on your W2. However, it is fairly common practice to pay it as Form 1099 income.

Zip Code: garyd@davisandbrandel.com

FYI, my future employer has told me that the IRS recently clarified that signing bonuses cannot be 1099 income - instead they must be W-2 and subject to conditional witholding.

Zip Code: pglickman@partners.org