Statutory Employee Income from a W-2

Statutory Employee Income from a W-2

Earnings as a statutory employee are reported as income in Schedule C rather than as wages on Form 1040. If a taxpayer receives a Form W-2 marked as a Statutory Employee in box 13, you will need to enter this income in two places in Software:

  • Enter the Form W-2 in its menu, ensuring "Statutory Employee" is checked in Box 13. (With this box checked, the income from Box 1 will not show as wages on Form 1040.)
  • Enter the W-2 Box 1 income in Schedule C, Profit or Loss From Business. If you're not familiar with creating a Schedule C in , see here for instructions.

After creating the Schedule C, enter the statutory employee income from the W-2(s) here:

  • Income
  • Income reported to you on Form W-2 as a Statutory Employee

The statutory employee can deduct on Schedule C their trade or business expenses from the earnings shown on Form W-2. Two caveats:

  • Do not combine statutory employee income with self-employment income. Instead, file a separate Schedule C for each type of income.
  • Do not carry net statutory income to Schedule SE. Social Security and Medicare tax should have been withheld and reported on Form W-2.

    • Related Articles

    • Household Employee Income

      To enter Household Employee income in Software, from the Tax Return Summary page in the return select: Federal Section Income Less Common Income Other Compensation Household Employee Income

    • Prisoner Income

      Prisoners are required to file a federal income tax return according to the same criteria as those not in prison. If in doubt as to whether a particular incarcerated individual needs to file, refer to IRS Publication 501. A prisoner may receive ...

    • Railroad W-2

      Railroad employers are subject to a separate system of employment taxes administer by the Railroad Retirement Board (RRB) and the IRS. Payments subject to railroad retirement taxes are specifically excepted from FICA, FUTA, and the Self-Employment ...

    • Enter Gambling Income or Losses

      Gambling winnings To enter gambling winnings in Software, from the Federal Section of the tax return (Form 1040), select: Income Less Common Income Gambling Winnings Select Taxpayer or Spouse, if needed. Enter all information from Form W-2G. If there ...

    • Puerto Rico Excluded Earned Income

      U.S. Citizens who lived in Puerto Rico for the entire year (bona fide residents) do not have to file a U.S. federal income tax return if all of their income was from sources within Puerto Rico. If income was received from sources outside of Puerto ...