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dhweinberg
Level 1

Using Schedule C when employer switches from 1099-NEC to intermediary company providing W-2s

The company I work for as an independent contractor used to send me a 1099. They now use an intermediary company to pay me, which provides a W-2. Can I report the W-2 income on Sch. C so I can deduct expenses against the income?

1 Best answer

Accepted Solutions
ToddL99
Expert Alumni

Using Schedule C when employer switches from 1099-NEC to intermediary company providing W-2s

You can report your W-2 income on a Schedule C and deduct expenses, but only if you are designated as a Statutory employee; Box 13 (Statutory employee) must be checked on your form W-2.  

 

If you are not a Statutory Employee, you will not be able to deduct unreimbursed employee business expenses from your W-2 income (some exceptions apply - see FEDERAL below).

 

Statutory employees are a very special designation and have their own special rules. If you are a statutory employee, you can claim certain business-related expenses on Schedule C instead of Schedule A. This means you get a bigger tax deduction than traditional employees.

 

Statutory employees are somewhere in between independent contractors and regular employees. Most people are regular employees - they work for an employer and the employer says what job will be done and how to do it.

 

Statutory employees have been declared employees under federal tax laws, but are independent contractors under common law. These workers are usually work salespeople or have commission-based jobs.

 

The information from the W-2 has to link with your Schedule C in order to claim expenses.

  1. In TurboTax Home & Business Online, go to Wages & Income and enter your W-2.
  2. Ensure that Box 13 "statutory employee" is checked. 
  3. Answer the questions on the subsequent screens until you get to:
  4. "Any Related Business Expenses?" Click "Yes". 
  5. Go through the interview questions. 
  6. Your W-2 Income is now linked to Schedule C. 

 

The FEDERAL job-related expenses deduction is only available to people who work in one of these specific professions or situations:

  • Armed Forces reservist
  • Qualified performing artist
  • Fee-basis state or local government official
  • You're disabled and have impairment-related expenses

View solution in original post

1 Reply
ToddL99
Expert Alumni

Using Schedule C when employer switches from 1099-NEC to intermediary company providing W-2s

You can report your W-2 income on a Schedule C and deduct expenses, but only if you are designated as a Statutory employee; Box 13 (Statutory employee) must be checked on your form W-2.  

 

If you are not a Statutory Employee, you will not be able to deduct unreimbursed employee business expenses from your W-2 income (some exceptions apply - see FEDERAL below).

 

Statutory employees are a very special designation and have their own special rules. If you are a statutory employee, you can claim certain business-related expenses on Schedule C instead of Schedule A. This means you get a bigger tax deduction than traditional employees.

 

Statutory employees are somewhere in between independent contractors and regular employees. Most people are regular employees - they work for an employer and the employer says what job will be done and how to do it.

 

Statutory employees have been declared employees under federal tax laws, but are independent contractors under common law. These workers are usually work salespeople or have commission-based jobs.

 

The information from the W-2 has to link with your Schedule C in order to claim expenses.

  1. In TurboTax Home & Business Online, go to Wages & Income and enter your W-2.
  2. Ensure that Box 13 "statutory employee" is checked. 
  3. Answer the questions on the subsequent screens until you get to:
  4. "Any Related Business Expenses?" Click "Yes". 
  5. Go through the interview questions. 
  6. Your W-2 Income is now linked to Schedule C. 

 

The FEDERAL job-related expenses deduction is only available to people who work in one of these specific professions or situations:

  • Armed Forces reservist
  • Qualified performing artist
  • Fee-basis state or local government official
  • You're disabled and have impairment-related expenses
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