The IRS classifies only four different categories of an employee who can be considered statutory: A driver who distributes beverages (other than milk) or meat, vegetable, fruit, or bakery products; or who picks up and delivers laundry or dry cleaning, if the driver is your agent or is paid on commission.
In this way, what are the benefits of being a statutory employee?
Employers usually pay half of Medicare and Social Security taxes for statutory employees. But generally, most statutory employees do not receive traditional benefits from their employer. Employees receiving benefits like health insurance, vacation time, or a 401(k) plan are usually considered common law employees.
Just so, what is the difference between a statutory employee and an independent contractor?
A statutory employee is an individual who is specifically defined as an employee by statute. Although most individuals are determined to be employees under common law, some workers—who for other purposes are viewed as independent contractors—have been defined as employees for employment tax purposes.
Can a statutory employee get a PPP loan?
You qualify for the PPP if any of the following are true: You file your taxes on Schedule C of your tax return. Businesses that file on Schedule C include independent contractors (often called 1099 folks), single-member LLCs, proprietorships, and statutory employees such as life insurance salespeople.
What are the 3 types of employment status?
There are three types of employment status: employee, worker and self-employed. The three are often not in practice used correctly and the difference is not always known.
Is it good to be a statutory employee?
That a statutory employee is tax advantaged because they can deduct their business expenses on Schedule C. … The unique advantage of being a statutory employee is that you are an independent contractor, with all the freedom that entails, without having to pay the onerous self-employment tax.
Does working from home make you a statutory employee?
Examples of statutory employees include specific home workers, traveling salesmen, commission drivers/agent drivers, and insurance salesmen.
Does a statutory employee receive a W2?
A statutory employee is an independent contractor who is considered an employee for tax withholding purposes if they meet certain conditions. This typically means they will receive a W-2 but are otherwise not considered full employees.
Is a pastor considered a statutory employee?
Pastors fall under the clergy rules.
They are considered a common law employee of the church so although they do receive a W2, their income is reported in different ways. The salary from the W2 is reported on the form 1040.
How does statutory employee affect taxes?
Employers are not required to withhold tax from the wages of statutory employees but are required to withhold and pay Social Security and Medicare tax for these employees. A statutory employee is allowed to deduct employment expenses on Schedule C instead of as miscellaneous itemized deductions on Schedule A.
Does a statutory employee have to file a Schedule C?
Statutory employees occupy a sort of middle ground between independent contractors and regular employees. … Statutory employees are entitled to deduct their business expenses on Schedule C, and must pay income taxes on their net income since their employers are not required to withhold income taxes from their pay.
Can a statutory employee deduct health insurance?
Statutory employees are unique because they are considered self-employed when it comes to income tax yet employed for medical tax and social security. Because of this, statutory employees can deduct 100% of health insurance premiums for themselves and their dependents, if they meet qualifications.
Is a nanny a statutory employee?
The simple answer is a nanny is NOT an independent contractor. A nanny, housekeeper, or home health aide that you hire directly is your employee under common law. It does not matter how many hours they work, whether the position is permanent or temporary, or how much you pay the worker.
Does an independent contractor file Schedule C?
Independent contractors report their income on Schedule C (Form 1040), Profit or Loss from Business (Sole Proprietorship). … This form allows you to figure social security and Medicare tax due on your net self-employment income.