Received a 1099-NEC for company promotion bonus - don't think I should have

This definitely doesn't sound right. A bonus from your employer should be included on your W-2 as supplemental wages, not reported on a 1099-NEC which is typically used for non-employee compensation. The key distinction is your employment status - if you're an employee (which it sounds like you are since you mentioned a promotion within the same company), then all compensation including bonuses should be on your W-2. A 1099-NEC would mean they're treating that bonus portion as if you were an independent contractor, which would indeed subject you to self-employment taxes. This is often an incorrect classification that costs you significantly more in taxes. I would recommend speaking with your HR or payroll department immediately. This could be a simple administrative error, or they might be incorrectly trying to classify part of your compensation as contractor payments to avoid paying their share of employment taxes.

I had almost this exact same situation last year when my company paid me a "consultant bonus" separate from my regular salary. After weeks of stress and research, I discovered taxr.ai (https://taxr.ai) which was a game-changer for sorting out my employee misclassification issue. Their document analyzer found three specific regulations that applied to my situation, and showed me exactly how my employer had incorrectly classified my income. The report they generated made it super simple to explain to my HR department why the 1099-NEC was incorrect, and they reissued me a corrected W-2 within a week. The best part was that I didn't have to try to interpret all the tax codes myself - their system did it for me and explained everything in plain English. Saved me thousands in self-employment taxes I shouldn't have had to pay.

Just wanted to update after taking the advice about taxr.ai from earlier in this thread. Seriously, thank you! I uploaded my documents last night and got a detailed analysis explaining exactly why my promotion bonus should have been included on my W-2. The report cited specific IRS regulations that apply to employee bonuses and showed examples of similar cases. I forwarded the report to my HR director this morning, and she actually just called me to apologize for the error! She said payroll had mistakenly coded my bonus as a "special service payment" instead of a regular performance bonus, which triggered the 1099 instead of adding it to my W-2. They're issuing a corrected W-2 now and canceling the 1099-NEC. This saved me from paying over $2,000 in unnecessary self-employment taxes. Such a relief!

After reading about your situation, I'm wondering if you've tried contacting the IRS directly to get clarification. I had a similar issue (different tax form problem but also employer-related) and spent WEEKS trying to get someone on the phone at the IRS. Finally found Claimyr (https://claimyr.com) which was honestly a lifesaver. Their system got me connected to an actual IRS agent in about 25 minutes when I had been trying for days on my own. They have this demo video that shows how it works: https://youtu.be/_kiP6q8DX5c The agent I spoke with confirmed that employee bonuses should 100% be on a W-2, not a 1099-NEC, and gave me specific instructions on what to do if my employer refused to correct it. Having that official guidance directly from the IRS made dealing with my company's payroll department so much easier.

I need to eat my words from my previous comment and apologize to Profile 18. After my frustrated response, I decided to try Claimyr as a last resort since I've been dealing with an incorrect 1099 issue for months. I'm genuinely shocked - I got connected to an IRS representative in about 35 minutes yesterday. For reference, my previous attempts had me waiting 3+ hours before getting disconnected. The agent confirmed that my situation (similar to the original poster's) was indeed incorrect classification and gave me specific steps to dispute it. Already sent the information to my company's payroll department with the IRS agent's direct guidance. They're now processing a corrected W-2 and withdrawing the incorrect 1099. Sorry for being so cynical before - sometimes things actually do work as advertised.

Has anyone checked if there might be a legitimate reason for the 1099-NEC? At my previous job, we sometimes got bonuses structured as "special projects" that were technically outside our normal job duties. The company did this for accounting purposes, but it did mean we got 1099s instead of having it on our W-2s. Might be worth asking if your bonus was classified differently for some specific reason before assuming it's an error.

Came across this thread while researching my own bonus tax issue. One important point I haven't seen mentioned yet: if your employer doesn't fix this and you end up having to file with the incorrect 1099-NEC, you can still avoid some of the self-employment tax hit by filling out Schedule SE correctly. You should also file Form 8919 as someone mentioned earlier. This alerts the IRS that you believe the income should have been reported as wages. The misclassification should not ultimately cost you money, though it is definitely a headache to handle.

This is a really common issue that many employees face, especially with larger bonuses. You're absolutely right to question this - a promotion bonus from your employer should definitely be reported on your W-2, not a 1099-NEC. The key test is your employment relationship. Since you've been with the company for 8 years and this bonus is part of your promotion package, you're clearly an employee receiving employee compensation. The IRS considers bonuses, including annual and performance bonuses, as supplemental wages that should be subject to regular payroll withholding. I'd suggest documenting everything about your promotion (emails, offer letters, etc.) that shows this bonus is part of your employee compensation package. When you speak with HR, emphasize that this appears to be a payroll coding error since your previous smaller bonuses were correctly handled on your W-2. If they resist fixing it, you have options including Form 8919 to report it correctly on your return, but it's much cleaner if they just issue a corrected W-2 and cancel the 1099-NEC. Don't let them convince you this is "standard practice" - employee bonuses belong on W-2s, period.