DEFINITION of 'Statutory Employee'

A class of employee that is permitted to deduct work-related expenses on Schedule C instead of Schedule A. Statutory employees are usually salespeople or other employees who work on commission.

Statutory employees are independent contractors under the IRS's common-law rules.

BREAKING DOWN 'Statutory Employee'

Statutory employees are granted a greater tax deduction for their business expenses than other employees, because Schedule C expenses are not subject to the 2% adjusted-gross-income threshold like expenses on Schedule A.

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