If workers are independent contractors under the common law rules, such workers may nevertheless be treated as employees by statute (statutory employees) for certain employment tax purposes if they fall within any one of the following four categories and meet the three conditions described under Social Security and …
Is an independent contractor a statutory employee?
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.
What does it mean to be a statutory employee?
The tax authorities often monitor employers on how they classify independent contractors and statutory employees. A statutory employee is a worker who straddles the divide between being self-employed and being considered a regular employee.
Can a employer withhold taxes from a statutory employee?
A statutory employee is an independent contractor that is treated as an employee for tax withholding purposes if they meet certain conditions. Employers are not permitted to withhold taxes for most independent contractors, but statutory employees differ in that they exist in a place between an employee and an independent contractor.
How is a statutory employee treated by the IRS?
But a statutory employee is treated as an employee for employment tax purposes. So a statutory employee is a cross between an independent contractor and an employee. The IRS classifies ONLY four different categories of an employee who can be considered statutory:
Can a contractor be classified as a statutory employee?
Now that you can answer what is a statutory employee, you need to know who qualifies for the classification. All statutory employees are independent contractors. But, not all independent contractors are statutory employees. The IRS requires employers to classify a very specific group of independent contractors as statutory employees.
