I am an independent consultant (sole proprietor LLC) that normally receives 1099s from clients, but one of my clients in 2020, who I did the majority of my work for, provided me a W2 & withheld FITW, SITW, Medicare, & Social Security. How do I report this as income as business income & take credit for the withholdings? I am using Turbo Tax Home & Business, which applied my 1009 income for the QBI deduction but applied this W2 income as personal income & excluded it from the QBI calculation.
FGM
Sorry that is W2 wages and won't go on your schedule C as business income. You need to talk to the employer about changing you to a 1099 independent contractor. Did they just pay you one time? You should have noticed they were taking out taxes from it.
I was paid that way over a series of projects across the year & didn't realize the impact of it until I did my taxes this year & noted the QBI deduction which was only applied to my 1099-income. The client that gave me the W2 stated, for their accounting purposes, it was simpler for them & better for me, if they applied standard payroll procedures (withheld taxes) & gave me a W2. I receive no benefits from the company & I am free to accept or decline projects. I have no previous employment history with the company, so this isn't a case of I was employed & then went into a part-time work status.
There is no way to manually input the income & withholdings directly onto my forms as business income & prepayment of taxes?
Thanks
FGM