| I have a little problem with this situation, you have no income to report against this payment of contractor services that you hired. You were paid via a W-2 and you hired a contractor and you gave him a 1099?
On what basis did you make this decision? Did you consult a CPA? What does he say how you should treat this?
The only option is report this payment on Schedule C and report his expense. But, the problem is how do you report income on Schedule C? There was none to report, unless I missed something here?
I think this calls for you to consult with a CPA and you better explain to him or her your entire situation and then take his advise to determine what is the best solution for you! | 
