Putting just one in at a time will not give you the right results. You need both entered at the same time. With the W-2 only entered, you get back $500, but that is wiped out by the additional income and self-employment taxes (about 15% of net S-E income) from the 1099. There is no withholding on the 1099 to cover the additional taxes it generates. Your results are as expected.
