How to report a bonus on your tax return?

When an employer gives you a bonus, it is included in the W-2 they provide you with. It is found in box 1 and is combined with your normal wages and salary. This means that from the eyes of the IRS, a bonus is treated no differently from the regular salary you receive.

Because it is seen as the same as your regular salary, you simply report your bonus as you would any other salary or wages you earn for that tax year. Bonuses are taxable, so if you do not receive a W2, you still must report them. For example, someone who is technically self-employed but received a bonus needs to report it on line 7 of form 1040.