You can't deduct your own or wife's W2 box 2 as a business deduction on Schedule C. If you pay an employee that is part of the gross wages on line 26. Are you asking about Schedule C in your personal return? Or a separate Business return? Is XYO your own company? Are yours and hers W2 from other jobs and employers? Because you can't pay yourself or issue a W2 to yourself from self employment on Schedule C.
