Consulting and Employer W-2

[TWB60]

I did engineering consulting for an ex-employer.  They kept me on the payroll, but I submitted hours.  I had no benefits.  Federal and state taxes were withheld and I got a W-2.  On the tax forms, my consulting business appears to have no income when the income was reported on the W-2.  Is this a problems

[Rick19744]

While the facts are limited and the situation requires a fair amount of additional information, it appears your "former" employer paid you as if you were an employee.

W-2 wages do not go on Sch C.  So if you followed the TT instructions for inputting your W-2, they will not be reported on Sch C.  The "wages" should be showing up on your 1040 line 1.

You indicate that federal and state taxes were withheld.

Were FICA taxes withheld as well?

If they were, then as stated previously, the former employer continued to treat you as an employee.

If FICA was not withheld, then you have a problem which is beyond the scope of this forum.  This means that the former employer most likely misclassified you and reported this incorrectly.

However, as noted earlier, there are many factors that need to be understood to determine the correct response. 

[DianeC958]

No, you report the W-2 you received in the W-2 section of TurboTax. If they marked on your W-2 in Box 13 that you were a Statutory Employee you link your W-2 to the expenses you have on your Schedule C for your business.If you do not qualify as a Statutory Employee then you are not allowed to deduct your business expenses from your W-2 income.If workers are independent contractors under the common law rules, such workers may nevertheless be treated as employees by statute (statutory employees) for certain employment tax purposes if they fall within any one of the following four categories and meet the three conditions described under Social Security and Medicare taxes, below.

• A driver who distributes beverages (other than milk) or meat, vegetable, fruit, or bakery products; or who picks up and delivers laundry or dry cleaning, if the driver is your agent or is paid on commission.
• A full-time life insurance sales agent whose principal business activity is selling life insurance or annuity contracts, or both, primarily for one life insurance company.
• An individual who works at home on materials or goods that you supply and that must be returned to you or to a person you name, if you also furnish specifications for the work to be done.
• A full-time traveling or city salesperson who works on your behalf and turns in orders to you from wholesalers, retailers, contractors, or operators of hotels, restaurants, or other similar establishments. The goods sold must be merchandise for resale or supplies for use in the buyer’s business operation. The work performed for you must be the salesperson's principal business activity.

Refer to the Salesperson section located in Publication 15-A Employer's Supplemental Taxa Guide
Social Security and Medicare Taxes
Withhold Social Security and Medicare taxes from the wages of statutory employees if all three of the following conditions apply.

• The service contract states or implies that substantially all the services are to be performed personally by them.
• They do not have a substantial investment in the equipment and property used to perform the services (other than an investment in transportation facilities).
• The services are performed on a continuing basis for the same payer.

@TWB60