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Category: Tax Questions

Statutory Employee Income

If a taxpayer receives a Form W-2 marked as a Statutory Employee in box 13, you will need to make two entries in the TaxSlayer Pro program.  First, enter the Form W-2 in the Form W-2 entry menu. Make sure that you place a check mark in the Statutory Employee box in box 13.  When you have completed the Form W-2 entry, exit out to the main menu of the tax return (Form 1040).

Statutory income reported on Schedule C.  The statutory employee can deduct their trade or business expenses from the earnings shown on Form W-2.  Earnings as a statutory employee are reported as income on line 1 of Schedule C (Profit or Loss From Business) or Schedule C-EZ (Net Profit From Business).  A statutory employee's business expenses are not subject to the reduction of 2% of their adjusted gross income.
  • 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.

 To display instructions for entering a Schedule C entry in the tax program click here.