How do I handle the entry of severance pay that I received in 01/08? I did not receive a statement or 1099. There was no withholding of any type including: federal or state taxes, social security, medicare or unemployment/disability (NJ). The company is in bankruptcy.
1) Company should send you a 1099 by Jan 31 2009. 2) Unless otherwise implemented, severance is almost always earned income and you'll owe all these taxes.
I realize that they should send me a 1099, but I do not expect one since the are Bankrupt and out-of-business. How do I report if they don't?
Even when a company goes bankrupt, there's usually some remnant of the company kept around, or taken over by some other company, to handle all the legal issues that have to be dealt with in the aftermath.
This thread has been discussing the use of a 1099-MISC. That implies that you were not an employee of the company, but rather an independent contractor. As such, you report compensation for services on either Schedule C-EZ or Schedule C. It doesn't matter whether you receive a 1099 or not. If you were an employee, then under normal circumstances, you would have received a W-2. As it appears you will not receive a W-2, then you should complete IRS Form 4852, Substitute W-2 and post your earnings on Line 7 of the tax return.
"Severance" implies that you were an employee. As such you should receive a W-2 from the bankruptcy trustee. Even if you don't, you report the gross amount as wages on line 7 of your 1040. You don't need a W-2 since there was no withholding. You calculate your FICA/Medicare on Form 8919 and pay it with your 1040.
If you were in independent contractor you report the gross on Schedule C and your self-employment tax on Schedule SE.
Sorry, can't help with NJ. Call 'em and ask.
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