Why did my taxes drop by 2/3 when I check Statutory Employee

[dantheman98]

I have income form several 1099 and a small W-2 from a company that I have done business with. I had entered a couple of my 1099's and my taxes were over $12,000. My W-2 was for $1,200 and when I checked the statutory employee box and answered the question about deductions from the schedule C, my taxes went down to $4,000. Will the software correct itself later on and reflect that I have more taxes or is the lower amount correct?

[DianeC958]

From what you have posted the lower amount is not correct unless on the W-2 you received the box is checked that you are a Statutory Employee. (This is not common).

Claiming you are a Statutory Employee means that you can take expenses against your W-2 income. 

Since you checked the box when putting in the information for your return, you need to return to your W-2 and take the check out of Box 13 for the program to calculate your taxes correctly.

Link for more information about Statutory Employees

[dantheman98]

I am a statutory employee, the W-2 is checked and I fit the insurance sales question that turbo tax asks. I understand this is not common but I fit the criteria.

[DianeC958]

If you are a Statutory Employee

The information from the W-2 has to link with a Schedule C in your tax return

1. In TurboTax Home & Business Online, go to Wages & Income and enter your W-2.
2. Ensure that Box 13 "statutory employee" is checked. 
3. Answer the questions on the subsequent screens until you get to:
4. "Any Related Business Expenses?" Click "Yes". 
5. Go through the interview questions. 
6. Your W-2 Income is now linked to Schedule C. 

Now you can enter your expenses which are related to your W-2 Statutory employee and will reduce that income.

Link to IRS with more information about Statutory Employees

[Anonymous]

turbo tax instructions

Statutory employee income cannot be reported on the same Schedule C as other self-employment income. If you have both types of income, report the incomes on two separate Schedules C.

[dantheman98]

When it asks about Life insurance sales, I sell health insurance as well as life. So, do I still answer that question about life insurance sales yes? Thank you for your help with this!

[RobertG]

Yes, on the Schedule C where you report your life insurance sales income, answer the question about life insurance sales 'Yes'.