An employee's gross wages belongs on Line 26, wages.
Why line 26
Wages paid to employees go on line 26 at gross, before the income tax and FICA you withheld, because withholding is the employee's money passing through you rather than a separate cost of yours. The figure should reconcile to the W-2 and Form 941 totals you filed for the year. Two things never belong on this line: payments to yourself, and payments to contractors who get a 1099. One reduction does apply: if you claimed an employment credit, line 26 asks for wages net of that credit so the same dollars are not relieved twice.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so an employee's gross wages lands on Line 26 without you sorting it.
Start for freeWhat an employee's gross wages is confused with
- Line 11, contract labor
- A worker you control and withhold from is an employee on line 26; an independent contractor you pay by invoice and report on Form 1099-NEC is contract labor on line 11.
- Line 23, taxes and licenses
- Gross wages are line 26; the employer's half of Social Security and Medicare, plus federal and state unemployment tax, is taxes and licenses on line 23.
- Part III line 37, part iii line 37, cost of labor
- Wages paid to workers who make the product you sell are cost of labor in Part III line 37, not line 26, so they reach the return through cost of goods sold.
Examples that belong on line 26
- $48,000 of gross salary for one full-time administrator
- $21,400 of hourly wages for two part-time shop staff
- $6,800 of seasonal wages over a summer
- $3,200 of wages paid to a spouse genuinely employed in the business
- $52,000 of gross wages reduced by a $2,100 employment credit claimed
What does not belong here
- Your own draw or anything you paid yourself.
- Contractor payments reported on Form 1099-NEC.
- Net pay after withholding instead of gross.
- The employer's share of payroll taxes, which is line 23.
- Wages for workers producing inventory, which belong in Part III.
The limit that applies
Enter wages net of any employment credits claimed. Report gross pay, not net pay.
What to keep
Keep the payroll register for the year with the W-2s and the quarterly Form 941 filings, so line 26 ties to numbers already filed with the government. A wage deduction that does not match the payroll returns is the easiest discrepancy there is to spot.
Other expenses on line 26
| Expense | Line |
|---|---|
| an employee bonus | Schedule C, Line 26 |
| payments to your spouse | Schedule C, Line 26 |
| vacation and sick pay | Schedule C, Line 26 |
| wages paid to your own child | Schedule C, Line 26 |
Related lookups
- Where do subcontractors go on Schedule C?
- Where does a business license go on Schedule C?
- Where do wages for production workers go?
Sources
This page explains how Schedule C lines work. It is general information, not tax advice for your situation. If an expense is large or the answer turns on a fact about your business, confirm it with your tax preparer.
Looking for a different expense? The full Schedule C line lookup has every line from 8 to 27 with the expenses that belong on each, and Schedule C expense categories walks the whole form in order.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so an employee's gross wages lands on Line 26 without you sorting it.
Start for free