What is the best way to claim cash on taxes?

Question

Hi, in 2006 my boss gave me a 'achievement' bonus of $15000 off payroll. I am going to claim this on my taxes, but what is the best way to do it so that i pay the lowest amount of taxes possible?

I didnt recieve a 1099, so i was going to claim it under additional income.. not sure.. please help!!

It was a gift from my boss personally, to me personally, it came from his own checking/savings account not from the company.

Answer 1

There isn't one way vs another that you can claim it and have it be "cheaper taxes." Your tax liability (tax that you owe) is going to be dependent on the total amount of money you made.

Answer 2

You have a choice: The right thing to do or not so right thing to do.

All your boss did was pay you the money without taking withholding. This additional
money is subject to Self-Employment tax. Your employer made a mistake. All of this
income should have been reported on your W-2. All bonuses are subject to Social Security, Medicare and Federal Withholding.

Not receiving a 1099 is not important. The bonus should have been included in your
W-2.

Right thing to do: Report the money on Schedule C, do not take deductions. Pay the
net self-employment tax and additional federal tax.

The Wrong Thing To Do? Follow everybody else' direction.

Best Wishes.

Answer 3

According to Publication 15 on pages 12 and 13, your bonus is subject to all the standard withholding requirement for income, Social Security, and Medicare Taxes and should be included on your W-2 statement from your employer and should not have been "off payroll".

You will need to ask your employer to issue a corrected W-2. If the employer refuses please see a qualified tax professional to properly report the income. It is more complicated than entering it under "other income".

Answer 4

They cannot legally give you a bonus "off payroll". Check to see if it was included in the gross wages on your W2. If it was not, they must reissue the W2 with the correct amounts on it.