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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.  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).

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

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.

NOTE: This is a guide on entering statutory income into the TaxSlayer Pro program.  This is not intended as tax advice.

Additional links:
Instructions for Forms W-2 and W-3
Form W-2
Form 1040 - Schedule C

Last Updated: 6/1/2018

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