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avneige
Returning Member

Self-employed but paid on W2

I am a freelancer but I have a 40-hour a week contract with an employer who pays me on W2, taking taxes out. I'm still not considered full-time and they don't provide me benefits. How do I account for self-employed status and home office deductions in this case?

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7 Replies

Self-employed but paid on W2

You don't.   If you received a W-2 you are an employee, despite the fact that you are not receiving "benefits".  W-2 employees cannot deduct job-related expenses like a home office on a federal tax return.

 

 

-W-2 employees cannot deduct job-related expenses on a federal return.  Job-related expenses were eliminated as a federal deduction for W-2 employees by the tax laws that changed for 2018 and beyond.  Your state tax laws might be different in AL, AR, CA, HI, MN, NY or PA.

 

 

If you live in a state that lets you deduct job-related expenses, the information will flow from your federal return  to the state return, so enter it in Federal>Deductions and Credits>Employment Expenses>Job-Related Expenses

 

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

Self-employed but paid on W2

One question---is the box for "Statutory employee" checked on your W-2?

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
avneige
Returning Member

Self-employed but paid on W2

That can't be correct.

avneige
Returning Member

Self-employed but paid on W2

No. Statutory Employee is NOT checked.

Self-employed but paid on W2

@avneige 

 

"That can't be correct.."

 

https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-credits-deductions/employees-deduct-...

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
TomD8
Level 15

Self-employed but paid on W2

@avneige --

 

@xmasbaby0  is correct.

 

If your income is reported on a W-2, then as far as the IRS is concerned you are an employee.  You may regard yourself as a self-employed free-lancer, but the IRS won't.

 

Per the IRS:

Employees are not eligible to claim the home office deduction.

 

https://www.irs.gov/newsroom/how-small-business-owners-can-deduct-their-home-office-from-their-taxes

 

The income of a self-employed individual is reported on a 1099-NEC, not a W-2.  If you have any self-employment income, then you'd be eligible for a home office deduction.  If your only income is W-2 and you claim a home office deduction, then your tax return won't stand up to audit.
 

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

Self-employed but paid on W2

the issue is between you and the company you work for.  

The company is treating you as an employee not an independent contractor.

you could fill out IRS form SS-8 to have the IRS determine your employment status.

read the instructions

the iRS will request the company you work for to provide their version of the SS-8

from the two filings a determination will be made 

don't expect a quick reply

https://www.irs.gov/pub/irs-pdf/fss8.pdf 

 

 

Worker requests determination. If a worker has requested a
determination of his or her status while working for you, you will
receive a request from the IRS to complete a Form SS-8. In
cases of this type, the IRS usually gives each party an
opportunity to present a statement of the facts because any
decision will affect the employment tax status of the parties.
Failure to respond to this request will not prevent the IRS from
issuing an information letter based on the facts available to it so
that the worker can fulfill their federal tax obligations. However,
the information that you provide is extremely valuable in
determining the status of the worker

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