Schedule C - Statutory Employee
Statutory employees are individuals who receive a Form W-2 with the "Statutory employee" box checked in Box 13. Although they are treated as employees for payroll tax purposes, they must report their income and related expenses on Schedule C (Form 1040) for tax reporting purposes.
Reporting Income on Schedule C
- Enter your statutory employee income from Box 1 of Form W-2 on Line 1 of Schedule C.
- Check the box on Line 1 to indicate that you are a statutory employee.
- Report all business-related expenses on the appropriate lines of Schedule C to calculate net profit or loss.
Self-Employment Tax Considerations
- Social Security and Medicare taxes are withheld from statutory employee earnings, so you do not owe self-employment tax on these earnings.
- If you have other self-employment income, you may still need to file Schedule SE (Form 1040) for that income.
- Do not include statutory employee income on Schedule SE (Form 1040), Line 2. Only report other self-employment income there.
Net Profit Reporting
- Enter your net profit or loss on Line 31 of Schedule C.
- Include this amount on Schedule 1 (Form 1040), Line 3.
- Do not report statutory employee income on Schedule SE (Form 1040), Line 2.
Additional Notes
- If you had both self-employment income and statutory employee income, you must file two separate Schedule C forms.
- Statutory employee rules do not apply to filers of Form 1040-SS.
- Statutory employees may still qualify for the Earned Income Credit (EIC) if they have a net profit on Line 31.
Source:
Schedule C (Form 1040) Instructions
Disclaimer: Always verify information with the official Federal or State Department of Revenue Forms and Instructions before filing your tax return.