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.
Where is statutory employee on W-2?
Statutory employees. Enter your statutory employee income from box 1 of Form W-2 on line 1 of Schedule C or C-EZ and check the box on that line. Social security and Medicare tax should have been withheld from your earnings; as a result, you do not owe self-employment tax on these earnings.
Why does my W-2 say statutory employee?
Statutory employees have been declared employees under federal tax laws, but are independent contractors under common law. These workers are usually salespeople or have commission-based jobs.
What is the W-2 form for a statutory employee?
Statutory employees also have to fill out a W-2 form and check box 13 for Statutory Employee. According to Rev. Rul. 90-93, it is imperative to understand that a statutory employee is not a common law employee. This needs to be known for the section of the W-R that addressed adjusted gross income (Sec.62) and 2% of itemized deduction (Sec. 67)
Who is a statutory employee of the IRS?
“Statutory” refers to the Internal Revenue Service (IRS) classification of workers who are subject to tax withholding by statute under its common law rules. A statutory employee is an independent contractor who is considered an employee for tax withholding purposes if they meet certain conditions.
Do you have to withhold income from a statutory employee?
The statutory employee does not have a substantial investment in the equipment and property they use to perform the services (exception: transportation facilities). Again, you are not required to withhold income tax from a statutory employee’s wages. Independent contractors receive Form 1099-MISC. Employees receive Form W-2.
Can a statutory employee fill out a personal tax return?
After receiving their Form W-2, a statutory employee can complete their personal tax return. Statutory employees attach Schedule C, Profit or Loss from Business, to Form 1040. Unlike employees, statutory employees do not fill out Schedule A, Itemized Deductions. There are numerous statutory employee benefits for the worker.
