I am self employed but rec'd a W-2. If I enter this as personal income, it looks like my business is losing money, thus increasing my risk of audit. Can I fix that?

[MiriamF · Accepted solution]

If you received this W-2 from someone else, then it is not self-employment income and doesn't get reported as part of your business. If you would have preferred it to be issued as a 1099-MISC, then you can ask the employer to change the reporting format, but he may refuse because of all the hassles it will cause him to do so.

If you are a sole proprietor, and you issued yourself a W-2, then you didn't need to because all of the business income is already yours.

If you issued a W-2 for yourself, the best way to fix this would be to file a corrected W-2 (form W-2c), deleting all the wages on your original W-2.

You can order Form W-2c free from the federal government. It will take about 10 business days to arrive. If it doesn't arrive in time, you may want to file for an extension.

Once you have filed the form W-2c and deleted the wages from your company's record, then your company's Schedule C and your tax return should be in good shape.