How should I proceed? Feb 2023 my former boss left company. In July sent me check for 20k, this year sent me a 1099-NEC. I'm not self employed & want to avoid huge bill.

Forum|Forum|1 year ago
April 6, 2024
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I am not self-employed and never have been. I also provided no services to this person in tax year 2023 since she left the company in February. I also hadn't worked directly for her for several years by the time she left. I'm confused about how to proceed because I was under the impression I would not be liable for this tax bill - former boss told me this in a phone call after I received the check. What are my options for reporting this income?

TurboTax Online

DianeW777

It depends. You can choose to treat this payment as wages, as an employee and report it using Form 4852, which is a substitute W-2. Once completed three things will occur:

You will be charged only the employee portion of social security and medicare tax (not double as a self employed person).
The IRS will go back to the employer for the employer portion of those taxes.
You must mail your tax return to the IRS - TurboTax will provide the instructions and address.
- How do I file a substitute W-2 using Form 4852?
- Keep all the documents in your file to show you were an employee

This is definitely taxable income to you (personal income tax as well as employee share of social security and medicare tax). The only other option would be to file as a self employed individual and you are not required to do that if you were an employee.

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