A taxpayer cannot use Schedule C to deduct expenses related to W2 income (statutory employees excepted).
But a taxpayer who has an established self-employed business (and normally files Schedule C) can still deduct (on Schedule C) expenses legitimately related to that business even if they have no income from that business in a given year. Example: an established commission-only real estate agent who has no sales in a given year, but still has expenses such as internet usage, realty association fees, business vehicle usage, advertising, etc., can still deduct those expenses on Schedule C, even with zero real estate income. But if that same realtor had a side job for which he or she received a W2, any expenses related to that W2 job would NOT be deductible.
**Answers are correct to the best of my ability but do not constitute tax or legal advice.
