Tax Law on Statutory Employees

Statutory employees are workers classified by the IRS as independent contractors for tax purposes, but they operate under certain employee-like conditions. Employers are responsible for withholding Social Security and Medicare taxes from their wages, but not federal income tax. Statutory employees can deduct job-related expenses on their tax returns, which typical employees cannot. This classification helps ensure that individuals performing specific jobs, like salespeople or certain delivery drivers, receive benefits like unemployment insurance while also providing some tax advantages. Understanding this classification is vital for both workers and employers to comply with payroll tax laws.