Statutory Employee Legal Advice
| Who is considered to be statuary employee? In simple words workers in certain occupation who would not be deemed as employees under the usual rules but are employees under the federal tax laws would be defined as statutory employees. |
In other words, statutory employees are somewhere between independent contractors and regular employees.
If you are a statutory employee, remember that your employer has to deduct FICA taxes from your income. As a statutory employee, you have to report your income on Schedule C or C-EZ though your employer will provide you with a W-2 Form which will show your income and the taxes that were withheld.
Since the FICA taxes have been paid by your employer, you are not required to file a Schedule SE or pay Self-Employment Contributions Act (SECA) tax on your income.
There can be instances when a person has both statutory employee income and as well as income from another source. If you are one with this type of income, you will have to file two Schedule C forms.
So, which are the occupations that come under statutory employee? The occupations can be divided as follows:
- Full-time life insurance salespersons who work primarily for one insurance company
- Traveling salespersons (this excludes agent drivers or commission drivers) who work full time on the principal's behalf and dispatch orders to customers who are retailers, wholesalers, contractors, or operators of hotels, and restaurants.
- Home workers who work on a contract or piecework basis, in their own homes or in the homes of others.
- Agent drivers and commission drivers are those individuals who:
- operate their own trucks or the trucks of the persons for whom they perform services
- serve customers chosen by their principals and customers they solicit on their own initiative
- make wholesale or retail sales
- are paid commissions on their sales or earn the difference between what they charge their customers and what they pay their principals for the products or services they sell.
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