1099 Income from stipend and moonlighting

[WiseTeeth]

I was curious if anyone knew how deductions would work for 1099 income from a stipend from a future employer? Is everything deductible cause everything in residency is really just working towards this job? My stipend income is actually a little higher than my gme salary and then I have another $30k of 1099 from moonlighting as well. I'm also reimbursed for driving to work by my moonlighting employer.

[Tim]

WiseTeeth
-I was curious if anyone knew how deductions would work for 1099 income from a stipend from a future employer?
Ordinary and necessary business expenses.
-Is everything deductible cause everything in residency is really just working towards this job? No
-My stipend income is actually a little higher than my gme salary
Good for you.
- and then I have another $30k of 1099 from moonlighting as well. I'm also reimbursed for driving to work by my moonlighting employer.

I don’t see where you are personally spending on business expenses.
Welcome to the Forum.
Fund any retirement plans and Backdoor roth .

[jfoxcpacfp]

• Expenditures that are strictly for 1099 income are 100% deductible (ie, driving for moonlighting). If the payor is including the mileage reimbursement in your 1099, you need to list the mileage deduction on your schedule C to offset
• Expenditures that are related to both W2 and 1099, I recommend prorating according to income from each source (ie licensing)
• Expenditures that are related too W2 only are not deductible on sch C (ie scrubs used only for W2 work b/c your 1099 payor provides them to you)

You need to check with your payor on the treatment of your stipend. They are usually taxable, but sometimes not. Will it be reported on a 1099-NEC, for example?

[WiseTeeth]

• Expenditures that are strictly for 1099 income are 100% deductible (ie, driving for moonlighting). If the payor is including the mileage reimbursement in your 1099, you need to list the mileage deduction on your schedule C to offset
• Expenditures that are related to both W2 and 1099, I recommend prorating according to income from each source (ie licensing)
• Expenditures that are related too W2 only are not deductible on sch C (ie scrubs used only for W2 work b/c your 1099 payor provides them to you)

You need to check with your payor on the treatment of your stipend. They are usually taxable, but sometimes not. Will it be reported on a 1099-NEC, for example?

Thank you for the response and all the great information! I checked with the payor and it is taxable 1099-(NEC?). I was also hoping to set up a solo 401k with this stipend money. Am I correct in assuming I can contribute 20% of my 1099 income to this solo 401k as the employer contribution? I'm currently maxing my work 401k with my W2 salary.

[jfoxcpacfp]

Thank you for the response and all the great information! I checked with the payor and it is taxable 1099-(NEC?). I was also hoping to set up a solo 401k with this stipend money. Am I correct in assuming I can contribute 20% of my 1099 income to this solo 401k as the employer contribution? I'm currently maxing my work 401k with my W2 salary.

You can contribute the following: 20% of your (net 1099 income - [related FICA taxes])

[toofy]

What makes you or your employer think you qualify for 1099 status? Many think it's simply a choice to make but the IRS has very clear rules on this. Your job qualifies for one or the other. Employers like 1099 because it shift the tax burden to you. It looks like you're a dentist like me. I am of the belief that the majority of dentists should be W-2 but a greedy employer pays them as a 1099. Do you bring your own handpieces and impression material to work?

https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

[jfoxcpacfp]

What makes you or your employer think you qualify for 1099 status? Many think it's simply a choice to make but the IRS has very clear rules on this. Your job qualifies for one or the other. Employers like 1099 because it shift the tax burden to you. It looks like you're a dentist like me. I am of the belief that the majority of dentists should be W-2 but a greedy employer pays them as a 1099. Do you bring your own handpieces and impression material to work?

https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

The point of the thread is that the OP’s stipend is being reported via 1099-NEC (at least, I’m presuming NEC status). The OP qualifies for 1099 status because it is being reported that way.

You are correct regarding reporting by the employer, but that’s not the OP’s problem, unless the employer is audited and required to recalibrate to W2, which would set a string of events in motion.

Disagree that this is the payer being greedy, at least not in every instance. I’ve met with plenty of doc’s who have been offered a bump up in pay rate for 1099 work. Not saying the employer is right but, again, that is not the point of this thread.

[toofy]

The point of the thread is that the OP’s stipend is being reported via 1099-NEC (at least, I’m presuming NEC status). The OP qualifies for 1099 status because it is being reported that way.

You are correct regarding reporting by the employer, but that’s not the OP’s problem, unless the employer is audited and required to recalibrate to W2, which would set a string of events in motion.

Disagree that this is the payer being greedy, at least not in every instance. I’ve met with plenty of doc’s who have been offered a bump up in pay rate for 1099 work. Not saying the employer is right but, again, that is not the point of this thread.

This is completely incorrect when you say "The OP qualifies for 1099 status because it is being reported that way." That was my point... employers think they can simply elect one or the other. It's NOT a choice. You meet the criteria for one or the other, period. The criteria are very well defined in multiple IRS/Dept of Labor publications and the fact is most of these healthcare positions should be classified as employees because they do not meet the tests for independence.

https://www.dol.gov/agencies/whd/flsa/misclassification

Yes, misclassification of employees as independent contractors hits the employer harder than the employee if the IRS gets involved. This should be a lesson to employers as well, since I know 2 doctors who were treated poorly and left their jobs, only to file a report to the IRS on their former employer that they were misclassified as contractors.

https://www.dol.gov/agencies/whd/fact-sheets/13-flsa-employment-relationship

[jfoxcpacfp]

This is completely incorrect when you say "The OP qualifies for 1099 status because it is being reported that way." That was my point... employers think they can simply elect one or the other. It's NOT a choice. You meet the criteria for one or the other, period. The criteria are very well defined in multiple IRS/Dept of Labor publications and the fact is most of these healthcare positions should be classified as employees because they do not meet the tests for independence.

https://www.dol.gov/agencies/whd/flsa/misclassification

Yes, misclassification of employees as independent contractors hits the employer harder than the employee if the IRS gets involved. This should be a lesson to employers as well, since I know 2 doctors who were treated poorly and left their jobs, only to file a report to the IRS on their former employer that they were misclassified as contractors.

https://www.dol.gov/agencies/whd/fact-sheets/13-flsa-employment-relationship

The OP is not an employer.

[toofy]

Nobody said the OP was an employer. He or she is likely misclassified by the employer.

[jfoxcpacfp]

Nobody said the OP was an employer. He or she is likely misclassified by the employer.

And that’s my point. It’s not the OP’s problem, it’s the employer’s.