Yes, as a statutory employee, you can deduct all of your expenses on schedule C, including paying employees (wages + employee benefits). TurboTax will account for this properly.
When you enter your W-2, be sure to check the Statutory employee box (and, of course, it must be checked on your W-2). When you go to the Self-employed Income & Expense section, setup your work as a business. In the income section, you'll be able to select you W-2 to apply to income.
Under the Income & expense summary screen, you'll see expense categories for employee wages and employee benefits.
