Director's Fee

[Jiggers]

Shareholder/Corporate Officer/Employee and Director wants to be paid a Director's Fee for each meeting. Usually one per quarter and one annual meeting.

Would the Director's Fee be subject to WH/SS/MED and reported on a W-2 or would it be paid and reported on a 1099MISC?

[dsi]

I found this at theIRS's website:
Directors fees received for performing services as a director of a corporation are self employment income if you are not an employee of the company and must be reported on your tax return. It does not matter whether the directors fees are for going to directors meetings or for serving on committees established by the directors. The earnings are taxable in the tax year received and must be reported on your tax return.

It makes me think that if your director is also an employee, then it should be included on the W-2, subject to all the withholding taxes.

[JAinNC]

Probably.
Be I think what the IRS quote you referred to is for local board of directors of banks, water or soil districts, etc. It these organization handle their reporting correctly then they issue 1099 misc for payments of this sort. Some local bank boards pay 100+ per month.
Jeannie

[Jiggers]

See IRS Pub 17

Just found this on page 86:

"CORPORATE DIRECTOR. Corporate director fees are self-employment income. Report these payments on Schedule C or Schedule C-EZ (Form 1040)."

[jimmcg]

I have several clients who serve on Boards which meet one to four times a year. Since none of them are "in the trade or business" of serving as directors I always report this as other income not subject to SE tax. Some have been questioned by the Service and I have always been successful in arguing my interpretation of the Code.

[Gretel]

That is interesting as I understood "being in business" means 1. for profit, 2. regularly and 3. continuity. Serving as director meets all these.

[jimmcg]

Service accepted my interpretation that meetings on a frequency of one to four times a year did not meet the "regular and continuous" criteria............I deal with the Cincinnatti District. ........................Worked for me!

[JON]

I lost

the arguement on this a long time ago here. Trustee it works that you probably do not do that for a living. Director fees do not fall in that classification (I think Bees gave that info).

I think a Director that is an employee gets his director fees on his W-2. Although I have seen some community banks put it on a 1099 to keep amounts off of the W-2 and examiners' eyes. I do not think that is right, and it should be on the W-2.

Jon

[JAinNC]

Around here all kinds of boards issue 1099s to individuals who serve as a director on a board. Like I said above, they may be a Conservation Board, Drainage Assesment Board, and some local bank boards. I advise my clients to keep up with everything because sometimes reimbursed expenses are included in the 1099 misc totals. (One of these happens to be my husband). If the amount included any reimbursed mileage, meals or lodging then those are deducted on the Sch C-EZ. One such 1099 misc started at 1400. and was reducted to 120. It is usually easier to keep up with everything and deduct it then it is to ask for a corrected 1099 from the payer.

Jeannie