Statutory Employee - John R. Dundon II, Enrolled Agent
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Statutory Employee

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Statutory Employee

I’ve found myself needing to specifically clarify what the definition of statutory employee means for IRS employment tax purposes. Statutory employees include:

1. full-time life insurance agents,

2. certain agent or commission drivers,

3. traveling salespersons, and

4. certain homeworkers.

Statutory employees do not owe self employment tax on these earnings, as Social Security and Medicare taxes have already been withheld. If as a statutory employee you have both self-employment income and statutory employee income, then two Schedule Cs should be completed. Do not combine these amounts on one Schedule C. Gross income includes income from whatever source derived including income received on a Form W-2 where Box 13 is checked as “Statutory employee.â€

If you are a statutory employee income from Box 1 of the W-2 is entered on Line 1 of Schedule C.