Case Study: TravelTax helps Staffing Referrals simplify referral bonus tax compliance

TravelTax shares referral bonus tax best practices with Staffing Referrals, including the 22% supplemental rate

Staffing Referrals consulted with Joseph Smith, president of TravelTax, a firm specializing in tax consulting for healthcare staffing agencies, to clarify the complex tax rules surrounding employee referral bonuses. The challenge was to determine the correct method for reporting and withholding taxes on these bonuses to ensure compliance and avoid creating unexpected tax liabilities for ambassadors.

The solution, provided by TravelTax, was a set of clear best practices for handling referral bonus taxes. For employee-ambassadors, the vendor recommended adding cash bonuses to regular paychecks for standard withholding and correctly using gift cards with timely tax withholding. For non-employee ambassadors, they advised using the 1099-MISC form instead of the 1099-NEC, saving ambassadors approximately 15% in taxes. Staffing Referrals highlighted that this guidance helps agencies remain compliant while improving ambassador satisfaction through transparent communication and even the option of offering net bonuses.

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