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 TaxSlayer Pro:
- Enter the Form W-2 in the Form W-2 entry menu, ensuring "Statutory Employee" is checked in Box 13; The income from Box 1 will not flow through to the Income Menu.
- Enter the W-2 Box 1 income on Schedule C, Profit or Loss From Business. - For instructions on creating a Schedule C, click on the link below.
To create a Schedule C for statutory income, from the main menu of the Tax Return Summary (Form 1040) select:
- Federal Section > Income > Profit or Loss from Business > Fill in the information as applicable and enter the Principal Business Activity Code.
- Input the necessary information in the Schedule C Data Entry Menu. This will include the name of the business (if there is one) and the address. Enter an EIN only if the employee has one. Do not enter the employee's SSN in this field.
- From the Schedule C Edit Menu select Income
- Enter the W-2 Box 1 amount in Income Reported on Form W-2 as Statutory Employee, select Continue
- If the employee has business expenses associated with these earnings, from the Schedule C Menu select General Expenses
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 rather than Form 1040 Line 1 "Wages, Salaries, Tips, etc.". 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.