The experts answer is incorrect. There is a particular tax form for this situation, form 8919. When you enter the 1099, there should be a list of special circumstances and one of those says something like “I received a 1099 and a W-2 from the same employer“. This will trigger TurboTax to prepare a form 8919 using code H, which is designed for this purpose, which will collect the employee share 7.65% Medicare and Social Security tax instead of 15% self-employment tax.
In fact, everything that your employer provides you as compensation for your services is supposed to be included on your W-2 and subject to regular income tax withholding and Social Security and Medicare tax, unless it falls into one of the excepted categories of fringe benefits, such as employer-provided health insurance. By paying you on a 1099, the employer is either, intentionally or from ignorance, trying to avoid paying their share of Social Security and Medicare, plus potentially unemployment insurance and any other items required by federal or state law.
