Does anyone know how supplemental unemployment benefits under a SUB Trust must be reported for tax purposes? The SUB Fund has been told that it must report the benefits on a W-2 Form to the individual. This does not make a whole lot of sense to me. The participants are not employees of the Fund, they are not performing any services, so how can it be considered an employee/employer situation. The subsequent issue with reporting these benefits on a W-2 Form is that such reporting has caused problems with the State Unemployment Compensation and the Trust be charged as an employer. Any information or thoughts on this would be greatly appreciated and if anyone else has dealt with something similar please let me know.

Cheers

I think the reporting depends upon whether the payments are treated as wages for FITW. If not (which I suspect), then trust should report payment of 600 or more in the aggregate on 1099-MISC. If they are treated as wages with FIT withholding, then Reg §1.6041-2 requires withholding on a W-2. for FITW, what counts is the entity that controls the payment, not who services were performed for (you're confusing FITW with FICA)