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1099 vs W2 for stipend

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  • 1099 vs W2 for stipend

    I completed my Residency in 2016.  I had been receiving a living stipend each month since August 2015.  For 2015, I received a 1099-MISC with all the income listed in box 7, i.e. as an independent contractor.  Fast-forward a year, and I just got my W2 from my new employer where I've been working for 6 months.  I expected to receive another 1099 for the stipend which ended in July, as well as a W2 for my employed work starting in August.  However, I simply received a W2, which also included some "other" income which accounted for the stipend.

    The issue is, I opened a Solo-401k at Fidelity on the assumption that I'd have this 1099 income for the year 2016, but now I don't. I'd wanted the solo-401k as a place to roll-over to for some old accounts as well as to have available for future roll-over needs.

    What should I do? Forget about/close the Solo-401k? Try and get my employer to redo the tax forms?  Don't worry about the forms, but still fund the Solo-401k anyway?

     

    I've heard mixed messages about whether you should ever receive both a 1099 and W2 from the same employer, but in this case it seems to fit since the two are separated chronologically, and the employment relationship didn't begin until the IC relationship stopped.

  • #2
    Did you not set up/contribute to any kind of plan for the 2015 IC income?
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      Unfortunately no... I didn't really know about the option to set that up until halfway through 2016.

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      • #4
        I am so sorry about that. You could have set up and contributed to a SEP by 10/15/16 and would be able to set up a SOLO-k now. Sadly, I believe that door is now closed unless you can convince your employer to revert back to the prior year's method of reporting.
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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        • #5
          Is there any disadvantage to them in reporting it as 1099? Any reason other than hassle they wouldn't want to separate it?

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          • #6
            No, it is actually advantageous.
            Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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