“Now I received a 1099 for those payments as well as my W2. “---->So you received both W2 and 1099 from the ER?? It is possible to receive both 1099 and W-2 forms as a single EEfor a single year. It would be rare, and an ER's giving a contractor/EE both forms for an overlapping period of time would draw scrutiny from the IRS. However, what if you ,a contractor, was hired on as a full-time EE during a tax year? That could happen, but the details of such an event would have to be well-documented, and both parties should prepare for some scrutiny. To do so, there would have to be a clear demarcation between time periods, because of differing rules governing a contractor and an employee.
“Before I got the 1099 I thought I wouldn't claim the mileage because he paid me for them, but now I have the 1099 so I'm not sure what to do.”-----> Amounts paid(reimbursed by your ER) under accountable plans are not income to the EE and are not shown on Form W-2.Under the nonaccoutable plans, Amounts paid under a nonaccountable plan are income to you, an EE,and must be included in wages on your W2 with appropriate tax withholdings. And you need to file Form 2106 an dyou must generally claim a miscellaneous itemized deduction on Sch A for the allowable business expenses if he or she wants to get any tax benefits from them. However, as an IC, you can deduct ,on your Sch C of 1040, the cost of hotels, meals and transportation if a contract requires you to complete the work outside of the local area and it is necessary to remain overnight. Hotels and transportation costs are fully deductible if not luxurious. However, the deduction for meals is limited to 50 percent of actual cost.As long as you work as an IC,you have to drive from one job to a second job or have to drive as part of your job, you can take a deduction for those miles on Sch C. You cannot deduct the miles you drive from your home to your primary place of work. The standard business mileage deduction is 51 cents per mile for 2011.However, as said above, expenses reimbursed by your ER under an accountable plan need not go on the 1099, so you can’t deduct it on your return as an IC. So, it depends on how your ER keeps his books. If your ER’s books show that he reimbursed mileage expenses, then under nonaccoutable plan, you can take the deduction andif NOT, it cannot be deducted by you.