If my employer gives me an end of the year bonus and doesn't withhold FICA how does the IRS get this money?

Question

I'm receiving a $1,000 bonus but am not having taxes withheld. Since there is no deduction on a 1040 for FICA taxes how does the SS Admin collect the $1,000 X ((6.2% (SS) +1.45% (Med)) = $76.50? Is it imbedded within the tax table?

Answer 1

Unless your income is already above the FICA ceiling, they should withhold it. Perhaps they will take it out of your regular paycheck as an added deduction.

Answer 2

Assuming the $1,000 is included on your W-2, and not paid to you via a 1099-MISC, then your employer will be required to pay it.

Your employer fills out and files with the IRS a form 941 quarterly. This form shows how much FICA (SS and MC) and Withholding the company is required to remit to the IRS. Normally the employer takes 1/2 from your paycheck and pays 1/2 him/her/itself. But if they fail to withhold it from your check then they'll be on the hook for the whole amount.

But I suspect they'll give you 1099-MISC for the $1,000 and you'll have to put it on a schedule C and pay both 1/2's yourself. You could file a SS-8 and a F8919 which will basically make your employer pay their half, and may get you fired (so think hard before you file those forms).

Answer 3

Neither your employer nor you get a choice in this legally. He MUST withhold both FICA and income taxes. PERIOD. And for the income tax withholding it is at a statutory rate of 25% NOT at your usual rate.

An employer CANNOT file a 1099-MISC for a bonus. That is clearly in violation of the law.

Answer 4

Taxes should be withheld on bonuses. There are exceptions for small gifts of nominal value.

You can report the income using Form 8919