2022 Statutory Employee - W2 and self-employed section?

[stephk1]

I am a statutory employee - seems like my income was listed twice though - in W2 and self-employment (which is where I entered my expenses). How do I ensure that I am not being charged for two separate incomes? Thanks!   Also - I do have a separate position which is only in the self-employed area.

@MichaelG81 

[JohnB5677 · Accepted solution]

If you are a statutory employee there was an option to include the money on the schedule C.  You should not have posted it to the Schedule C separately; it should have carried over.

The only way to know is to preview your tax return.

You can preview your tax return by going to:

1. On the menu bar on the left that shows.
   1. My Info
   2. Federal
   3. State
   4. Review
   5. File
2. Select Tax Tools
3. On the drop-down select Tools
4. On the popup menu
5. Select View Tax Summary
6. On the left sidebar
7. Select Preview my 1040.
   1. Line 1 should not include the statutory employee income.
   2. Line 8 should include the business income.
   3. Line 8 comes from Schedule 1 which also can be reviewed.
8. Schedules 1,2&3 are included if you scroll down past your 1040.
9. To return to the entry screens press Back on the sidebar.

Some key numbers on your 1040 tax return are:

Line 15 - Taxable Income

Line 24 - Total Tax.

Line 25 - Withholdings.

Line 33 - Payments including Credits.

Line 34 - Overpayments.

Line 37 - Tax owed.

If I've misunderstood your question, and this does not completely answer it, please contact us again and provide some additional details.

[stephk1]

Thank you very much. I will check. It does say that a Schedule C was created for that income..so I guess it's okay - but I will check the schedule C.

It just seems that my net income with the standard deduction should cause a tax expense of a few hundred lower than it shows I owe..  

Thanks - I will look there. @JohnB5677 

[stephk1]

Hi @JohnB5677 

Again, thanks so much for your advice.

So, if after subtracting the standard deduction, the taxable income is zero, do I still owe because it's the SE tax? 

thanks!

[JohnB5677]

It is possible.  the income tax calculation is on your total income including wages and Business.  The standard deduction could bring your income tax to zero.

The profit from your business then goes through a second tier of taxes.  That is the se tax.  You already took your deductions against the business, there is no other standard deduction.

The self-employment tax rate is 15.3%. That rate is the sum of 12.4% for Social Security and 2.9% for Medicare.

[stephk1]

Hi @JohnB5677 

My QBI deduction does not seem to have populated (not sure if that's the right way to put it...)

What can I do to ensure that is applied?

Thanks!!

[DaveF1006]

QBI is generated automatically when you have self-employment income. It is reported on line 13 of your tax return.  It is determined from the net income from your business. In this case, the income is the amount of W2 wages you received. Since you are a statutory employee, you are considered as having a business.

QBI is calculated by taking your Gross income - expenses - 1/2 deduction for your Self-employment earnings-any retirement or Health insurance deducted by the business. Whatever remains is multiplied by .2 to get the amount of your QBI.

If you had a net loss in the business, you would not receive any QBI. Check box 13 of the 1040 to see if QBI is listed there. If not, go back and review your entries in Schedule C and supply any information that is required. 

Make sure also to check the Box on your W2 indicating you are a statutory employee. Once you check the box and finish the W2, there will be some follow questions for you to complete. Once these are complete, 

1. Go to Federal > Income & Expenses>
2. Self employment>self-employment
3. You will see your profile started.  Your income is already reported in the program as W2 income so you will need to finish out this section to claim your QBI.
4. After expenses are entered and you have a net profit after entering your expenses, the amount of the net profit  is  multiplied by .2 to determine your QBI.

@stephk1

[stephk1]

hi @DaveF1006 

Thank you so much for your reply. I will check to make sure the statutory box is marked and follow the steps you outlined.

Thanks!

[stephk1]

@DaveF1006 

Hi - So I completed the self-employment information (it was almost finished prior)..

And the QBI is still showing as 0..

Thanks for your continued help!

[LindaS5247]

QBI is calculated by taking your Gross income - expenses - 1/2 deduction for your Self-employment earnings-any retirement or Health insurance deducted by the business. Whatever remains is multiplied by .2 to get the amount of your QBI.

If you had a net loss in the business, you would not receive any QBI. Check box 13 of the 1040 to see if QBI is listed there. If not, go back and review your entries in Schedule C and supply any information that is required. 

The deduction amount depends on the taxpayer's total taxable income, which includes wages, interest, capital gains (etc.) in addition to income generated by the business. Once the taxable income reaches or exceeds $170,050 ($340,100 if filing jointly), the type of business also comes into play.

At incomes below that level, the deduction is 20% of either taxable income (minus capital gains and dividends) or the QBI, whichever is less.

At higher income levels, the deduction is reduced or eliminated, depending on the nature of the business. The calculations also get quite complicated, but TurboTax easily handles them and will figure out how much of a deduction you’re entitled to.

For the purposes of the deduction, QBI is defined as net business income, excluding:

• Income generated outside the United States
• Investment income
• W-2 compensation paid to an S corporation owner
• Guaranteed payments to a partner
• Income from REITs, publicly traded partnerships, and qualified cooperatives (these entities may qualify for a 20% deduction under a different set of rules, the explanation of which is beyond the scope of this FAQ).

This deduction applies to Schedule C filers (sole proprietorships and other self-employed businesses), LLCs, partnerships, S corporations, estates, and trusts. Certain rental enterprises may also qualify. Corporations are not eligible because they received their own tax breaks under the TCJA.

That said, not every eligible business automatically qualifies for the deduction. In particular, some types of service businesses (SSTBs) are disqualified once the taxable income on the return exceeds $220,050 ($440,100 if filing jointly).

Make sure also to check the Box on your W2 indicating you are a statutory employee. Once you check the box and finish the W2, there will be some follow questions for you to complete. Once these are complete, 

1. Go to Federal > Income & Expenses>
2. Self employment>self-employment
3. You will see your profile started.  Your income is already reported in the program as W2 income so you will need to finish out this section to claim your QBI.
4. After expenses are entered and you have a net profit after entering your expenses, the amount of the net profit  is  multiplied by .2 to determine your QBI.

[stephk1]

Thank you @LindaS5247 

I did not have a loss

I am unable to see the schedule c report at all

and the QBI shows as 0

Not sure what I should do

The statutory box is checked

Thanks so much

[stephk1]

@LindaS5247 

@DaveF1006 Is it because my AGI after the deduction is negative? Is that what you were indicating with it being a  business loss?

Thanks!

[LindaS5247]

You can preview your return using the following instructions to see if your income is being double counted and you can see your Schedule C.  Did you check that?

As far as the QBI deduction did you read all of the eligibility/ineligibility requirements I listed?  Not everyone gets it if you meet or do not meet some of the criteria.

You can view your entire return or just your 1040 form before you e-file using the following steps:

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2. Open or continue your return
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4. With the Tax Tools menu open, you can then:
   • Preview your entire return: Select Print Center and then Print, save or preview this year's return (you may be asked to register or pay first)
   • View only your 1040 form: Select Tools. Next, select View Tax Summary in the pop-up, then Preview my 1040 in the left menu

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I think take a look at the preview of your return and if this does not help please feel free to come back to TurboTax Community with additional details or questions or click here for information on Turbo Tax Support.  You can connect with a Live TurboTax Agent and share your screen.

[stephk1]

@LindaS5247 when I subtract the earnings from the standard deduction - it is a negative # - so the taxable income is zero. Is that why I can't get the QBI deduction then? Is that what you meant by a loss?

Thanks!

[stephk1]

@LindaS5247 , @DaveF1006,  @JohnB5677 

Hi,

So, does it make sense that this year I earned 11k less than last year, but I owe about $100 more?

There are some credits that seem to not apply because my taxable income is zero (including that QBI)..

so - does this make sense? Last year my taxable income wasn't zero. This year, after the deduction, it is.

Also - why would I owe a penalty for not withholding during the year...I didn't do so last year and I don't believe I had to pay a penalty.

Thanks so much for your continued support. I am hoping to just wrap this up now -  I thought about adding the live help - but if I could save that additional expense, that would certainly help.

Kind regards..