Independent contractor or not?

[G450pilot]

In September of 2022, I retired from my full-time employment as a commercial  (charter) pilot for a large charter management firm, intending to start a contracting business to provide essentially the same services to them and to other non-charter companies.  In doing this, I became responsible for my own FAA-mandated training to the tune of $23,400 per year.  I assumed that I would be able to report this expense on my Schedule C, but after receiving a W-2 for my pre-retirement AND post-retirement income combined, I realized that "the company" still viewed me as an employee, albeit part-time, even though they do not schedule my flights and I have no obligation whatsoever to accept a day of work.  Furthermore, they do not provide any benefits other than tax-withholding.  I filed a Schedule C but received a 'warning' from TurboTax that the IRS may not accept this.  I have recevied my refund, but am now having second thoughts as to whether I should file an amended return, deleting the Schedule C and associated losses from operation.  Any help would be greatly appreciated - I really do not want this to result in an audit, but don't want to give up almost $6000 in refund to the IRS.  Thanks in advance. G450driver

[Bsch4477]

If your income is from a W-2 you are an employee. 

[AmyC]

 You can ask the company to send a corrected w2 with no wages and issue a 1099-NEC instead. That would be the easiest solution. I am assuming you entered the w2 as wages but I wonder if you also claimed them as income for the business. You can't claim the same income twice. Talk to your former employer, develop a plan with them. You may need to amend the return you filed but not until after more thought, discussion and original return is settled with finances finished.

Be sure they know moving forward, you are a contractor. If they are your only client moving forward, it sounds like a part-time job.

Worst case scenario:

If your income was from one company and they are determined you have a w2, you will have to really prove you were on your way as a contractor and the w2 was a mistake. You can use Publication 5520 to help prove your stance as a contractor. When you have more clients in 2023, that will strengthen your position with the IRS. Most audits of this type will take a while to be started so you have time to build your business and clientele.

See Small Business and Self-Employed Tax Center |IRS.