Statutory Employee

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. 1040 Form

    The standard Internal Revenue Service (IRS) form that individuals ...
  2. Adjusted Gross Income - AGI

    A measure of income used to determine how much of your income ...
  3. Commission

    A service charge assessed by a broker or investment advisor in ...
  4. Schedule A

    A U.S. income tax form used by taxpayers to report itemized deductions, ...
  5. Independent Contractor

    A self-employed taxpayer that controls his or her own employment ...
  6. Self-Employed Person

    An independent contractor or sole proprietor who reports income ...
Related Articles
  1. Retirement

    How is an SBO-401(k) set up?

    Learn what a Small Business Owner 401(k) plan is and who is eligible to establish one. Find out what the IRS requires of SBO-401(k) participants.
  2. Entrepreneurship

    I have a small business, and I'm considering setting up an SEP IRA. What are leased employees? Does ...

    Generally, a leased employee is the employee of an outside organization from which you lease the employee's services. For instance, you may use the services of a payroll clerk who is really employed ...
  3. Entrepreneurship

    Tax Credit For Plan Expenses Incurred By Small Businesses

    Determine whether your business is eligible to claim a tax credit for establishing a retirement plan.
  4. Taxes

    10 Money-Saving Year-End Tax Tips

    Getting organized well before the deadline will curb your frustration and your tax liability.
  5. Brokers

    Top Tax Deductions For Brokers

    If you are paying out of pocket, you can make your business expenses work for you at tax time.
  6. Taxes

    3 Common Tax Questions Answered

    We clarify some rules that often puzzle taxpayers.
  7. Investing Basics

    Enterprise Resource Planning System: A How To

    An ERP system won’t transform poor management into good management, but the real-time business analytics can help make good management even better.
  8. Professionals

    What's the average salary of a bank teller?

    Read this article to find out more about average bank teller salaries, median hourly wage rates and potential future career prospects.
  9. Investing Basics

    How To Calculate Goodwill

    Goodwill is an intangible, but it is still possible to effectively calculate or estimate goodwill for a company.
  10. Professionals

    What's the average salary of a business operations manager?

    Read about the average yearly salary of business operations managers, and find out which locations and industries offer the best pay for these professionals.

You May Also Like

Hot Definitions
  1. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  2. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  3. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  4. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  5. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  6. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
Trading Center