You need to find out how the employer intends to report that "stipend" income. Are they including it on the same W-2 along with your other hourly wage income or are they going to put that on a 1099NEC and report it to the IRS as "self-employment" income. If they are doing that (which is sketchy) that means no tax would be withheld from that "extra" stipend amount and you will end up owing and paying tax on all of that---when you have "self-employment" income you pay all of the Social Security and Medicare amount yourself--15.3% of it will be owed as self-employment tax. And you would also be subject to the ordinary federal and state tax.
In other words---if they pay you that "additional" $9/hour and treat it like self-employment income on a 1099NEC, you will pay all of the tax on that with nothing withheld for tax and no part of it paid by the employer. Find out now how the employer plans to put that income on tax documents. If they are putting all the $20/hour income on a W-2 and withholding Social Security and Medicare and ordinary federal and state tax, that is different. But you do not want a nasty surprise at tax time.
I hope another ( or several ) Champs weigh in on this one to share their thoughts as well. @Opus 17 @rjs
**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
