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. Commission

    A service charge assessed by a broker or investment advisor in ...
  2. Adjusted Gross Income - AGI

    A measure of income used to determine how much of your income ...
  3. Self-Employed Person

    An independent contractor or sole proprietor who reports income ...
  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. 1040 Form

    The standard Internal Revenue Service (IRS) form that individuals ...
RELATED FAQS
  1. How is an SBO-401(k) set up?

    Small Business Owner 401(k) plans have grown in popularity following changes enacted through the Economic Growth and Tax ... Read Full Answer >>
  2. I have a small business, and I'm considering setting up an SEP IRA. What are leased ...

    Generally, a leased employee is the employee of an outside organization from which you lease the employee's services. For ... Read Full Answer >>
Related Articles
  1. 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.
  2. Taxes

    10 Money-Saving Year-End Tax Tips

    Getting organized well before the deadline will curb your frustration and your tax liability.
  3. 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.
  4. Taxes

    3 Common Tax Questions Answered

    We clarify some rules that often puzzle taxpayers.
  5. Investing

    What Tech Companies Seeking Funding Must Overcome

    Tech companies face a unique set of challenges, including a need for timely responses to changes in technology and difficulty recruiting the right talent.
  6. Economics

    Vietnam -- New Asian Hot Spot For Tech Investment

    Vietnam now has a rapidly expanding tech sector that's attracting investors from around the globe due to low business costs and highly skilled workers.
  7. Investing

    What are Preference Shares?

    Preference shares, also referred to as preferred shares, are equity shares that give the shareholders certain rights ahead of common shareholders. For instance, when the corporation declares ...
  8. Stock Analysis

    Will American Airlines Fall Back To Earth In 2015?

    The airline industry enjoys blockbuster profits, and American Airlines Group has been a key beneficiary of the favorable trends that have lifted stocks.
  9. Stock Analysis

    3 Things I Learned From The Container Store's 10K

    Since going public at the end of 2013, The Container Store's shares have fallen by roughly half their value. But not all is not lost.
  10. Stock Analysis

    Qualcomm's New Buyback Program Is Well-Timed

    Qualcomm announced after market close on Monday that they had approved a new stock buyback program, authorizing to repurchase $15 billion in shares.

You May Also Like

Hot Definitions
  1. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  2. Asset Class

    A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same ...
  3. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  4. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  5. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  6. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
Trading Center