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dantheman98
Level 2

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

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?

6 Replies
DianeC958
Expert Alumni

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

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

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dantheman98
Level 2

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

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
Expert Alumni

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

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

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Anonymous
Not applicable

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

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
Level 2

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

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
Expert Alumni

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

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

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