Statutory Employee - Schedule C

[TWYW]

On my W-2, Box 13 was checked as Statutory Employee. After I input all information on Turbo Tax, it lead me into Schedule C.  Then I got a message on Smart Check here.  "W2 Statutory cannot be reported on the same Schedule C as other business income. Either remove any amount entered for statutory employee income or unlink the W-2 worksheet from this copy of Schedule C and link it to a different Schedule C".   

Turbo Tax automatically took me into Schedule C with my income reported on my W-2.  Now it says W2 Statutory cannot be reported on the same Schedule C.  What do I need to do here?  

[JotikaT2]

It depends.

Box 13 should only be checked if you are a statutory employee.  A statutory employee is treated as an employee for withholding Social Security and Medicare taxes but are in all other respects like independent contractors.  Statutory employees are typically either drivers, full time life insurance sales agents, people work from home with materials supplied by the employer, or a full time traveling salesperson.

If this applies, you will be able to enter any applicable expenses to offset that income under Business Income and Expenses.  You will be prompted to link this W-2 form to a specific business if this applies.  When prompted on the screen titled "where do you want to add this income," select Create a new Schedule C."

However, if you are not a statutory employee, you should contact your employer to see if they will correct your W-2 form.  In TurboTax, you can also make an entry to remove this designation.  To do this, log back into Turbotax.

1. Select Personal Income and I'll choose what I work on.
2. Select update to the right of Wages and Salaries.
3. Select the applicable W-2 form, and select Edit.
4. Leave box 13 checked as reported by your employer and select Continue.
5. Proceed through the screens until you see the screen titled tell us more about xx statutory employment.
6. Select the box to the left of None of these apply.  This will remove the message and allow you to proceed.