Expert: Shirley McAllister, CPP, PHR - 3/6/2009

Question
QUESTION: I work for a race team and we get paid by our sponsor which is our employer.  But we get bonus from the car, and our bonus check comes from our racing company which is it's own entity business wise.  But they pay us 1099 for bonus.  We are begining to think we are getting the short end of the stick.  Granted we can right off travel expenses and per diem which usually can easily be $5-6K. Should we be asking for this to come under our regular payroll as a seperate check or should we just stick with 1099?  Which will we see more return?

Thank you

ANSWER: In this instance you are recieving the bonus from a different entity. They would have to put you on their payroll to pay it as payroll.

If it were paid as payroll you would be working for two different companies. They would both be taking out Fica, Medicare, Federal and State taxes independent of each other.

I think you have the better part of the deal the way it is.

Shirley

---------- FOLLOW-UP ----------

QUESTION: Well actually they were going to send the bonus money to our current employer so we would just get a monthly bonus check along with our current weekly check.

Answer
If they are both written from the same company than it cannot be done that way.  An employee cannot be both W-2 and 1099. They have to be paid one way or the other. You can get checks from two different companies one 1099 and one W-2 but from the same company it is not allowed.

Shirley