Do I have to declare performance awards in the IRS? How?
If you received a performance award, find out if you have to declare it and, if you are exempt from IRS, how to declare it in Annex H, Table 6, so that this exemption is correctly applied.
Do I have to declare performance bonus on IRS?
There is a novelty this year in the IRS: Taxpayers who received awards from your company must put that value in annex H on line six to qualify for tax exemption. Pedro Andersson, on his instagram, alerts to this information provided by the Tax Office.
The accountant explains that those who received performance bonuses in 2024 may have to declare them in the IRS, but there is a condition: This only happens with companies that increased all employees by 5% last year.
But how do you know if your company increased all employees by 5%? To do so, you must check your annual company statement with your income and all contributions made to Social Security and IRS, and in the line of the bonus received, there must be 19b - Bonus awarded to the worker under Article 19b of the tax benefits statute.
In other words, the company meets the requirement to give the worker this prize which will be exempt from IRS.
Therefore, if on your annual income summary sheet given by your company, line 19b is there, then you should take the money from your annual income and put it on Annex H in box six.
If you don't have this line, you will have to pay taxes on your performance bonus.
How to declare performance award in IRS?
- Access the IRS statement.
- In the Finance Portal, fill out the IRS declaration and add Annex H;
- Fill out Form 6 - Tax Benefits and Incentives;
- Choose the exemption code corresponding to the performance prize.
- Indicate the amount of the prize received;
- If necessary, justify the nature of the award in the description.
Read more: How does IRS affect financial capacity to apply for credit?
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