Full-time life insurance salespeople. They must work for one company. They must work at home for one employer doing needlework or making clothing, bedspreads, buttons, quilts, gloves, and the like. Traveling or city salespeople. They must sell for one principal employer.
Statutory employees receive special treatment when they deduct unreimbursed business expenses.
They can use Schedule C to deduct their expenses instead of Schedule A, which means they are not subject to the 2 percent adjusted gross income limitation on miscellaneous itemized deductions. The statutory employee box must be checked on Schedule C and on the employee's W-2. The employer pays one-half of FICA, and the other half is withheld from the employee's wages. These people are licensed and paid on a commission basis. Their contract must state they are not employees for federal tax purposes.