How Do I Report Income from Bonuses on a W2 Form?

Report the bonuses that you paid an employee during the year in box 1 on a W2 form. Bonuses are a form of compensation. The Internal Revenue Service subjects them to the same taxation as your employees’ salaries or additional wages. Withhold a specific amount from employee bonuses for Social Security, Medicare, and additional income tax withholdings. Employers should consider a bonus as a supplemental wage. Total the amount of bonus wages and then calculate the bonus value for bonuses that the IRS do not classify as direct wages, including vacations. Enter your employee’s total wages and supplemental wages in box 1 on a W2 form.

Entering employee bonuses may feel redundant, but our W2/1099 software’s Common Payee File lets employers avoid entering other payee information multiple times. Download our free demo software to learn the basics and see how our software’s efficiency is a step above.

Software Solutions from AMS

Our W-2 and 1099 Forms Filer is our only required platform. From there, users pick the services they need. Choose from the tools below to build out your customized accounting software.