What is a Statutory Employee?
The term "statutory employee" refers to an independent contractor who is classified as an employee for tax withholding purposes.
Income earned as a statutory employee is reported on Schedule C, rather than as wages on Form 1040. If a taxpayer receives a Form W-2 marked with "statutory employee" in box 13,
Here's how to enter it in the software:
From the left-side menu, search for W2, then select Form W-2, Wage and Tax Statement, as shown below.
Alternatively, to access Form W-2, go to Income and then select Form W-2.
2. When on Form W-2, enter all the information regularly, then scroll down to Box/Section 13, then check the box for Statutory Employee
(checking this box makes the wages entered on W-2 not show under 1040 wages, however, you should still enter all the information on Form W-2 the same way).
3. Click Continue
4. When you see the message indicating that you selected the Statutory Employee box and that income (Box 1 on the W-2) must be reported on Schedule C, click "Create a Schedule C."
5. From the Schedule C menu, choose Income
6. Enter the amount from Box 1 (Wages) on the W-2 into the "Income Reported to You on Form W-2 as Statutory Employee" box.
It's important to note the following:
Income from statutory employment should NOT be combined with self-employment income. If you have self-employment income, you must file a separate Schedule C for it. Do not combine the Schedule C for statutory employment with any other Schedule C.
Do NOT transfer statutory income to Schedule SE. Social Security and Medicare taxes should have already been withheld and reported on Form W-2.