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W-2 or 1099 for former employee still receiving pay?

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in Office Management,Payroll Management

Q: We have an agreement with a former employee to continue to pay him quarterly bonuses for clients he referred to us. Can we issue him a Form 1099-MISC or are the payments considered wages, which must be reported on a Form W-2?

A: It doesn’t matter if the employee no longer works at your firm. An employer-employee relationship existed, so the payments are work-related, taxable and reportable on a W-2.

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