H1B holder got 1099MISC

[goodman0621]

My friend was a postdoctoral research fellow at a university, and he had been paid with both W2 (30%) and 1099MISC box7 (70%) throughout his 29-month OPT and 1-yr H1B. The W2 was from the university who sponsored him H1B, and 1099MISC from a company owned by his university mentor who made him an "independent consultant". The mentor used my friend's postdoc research outputs to make money for his own company, and paid my friend each month. My friend just realized it is illegal to work this way after being a H1B holder and therefore got very upset. Will the following approaches work to relief this situation?

1) Claiming the 1099MISC money as research funds granted to my friend from his mentor's company rather than self-employment compensation?

2) Claiming the 1099MISC money paid during the h1b period are "late bonus" only for the job done during my friend's 29 month OPT with valid EAD?

[harry83]

My friend was a postdoctoral research fellow at a university, and he had been paid with both W2 (30%) and 1099MISC box7 (70%) throughout his 29-month OPT and 1-yr H1B. The W2 was from the university who sponsored him H1B, and 1099MISC from a company owned by his university mentor who made him an "independent consultant". The mentor used my friend's postdoc research outputs to make money for his own company, and paid my friend each month. My friend just realized it is illegal to work this way after being a H1B holder and therefore got very upset. Will the following approaches work to relief this situation?

1) Claiming the 1099MISC money as research funds granted to my friend from his mentor's company rather than self-employment compensation?

2) Claiming the 1099MISC money paid during the h1b period are "late bonus" only for the job done during my friend's 29 month OPT with valid EAD?

Harry: Yes, it's illegal to have 1099 Misc income when u r in H1B visa(exceptions apply). Point 2) is a better option to go with, if you can proof it in case of an audit in future.

In any case, Do file 1099 misc income in your returns otherwise it may create problems in future.