What is a statutory employee?

[Watson]

Can someone explain what is a statutory employee in simple terms? How is this type of employee different from regular employees or contractors? I’d also like to know how they are taxed.

 

[grace]

It's kind of a middle ground between a regular employee and an independent contractor, they work independently but the law still treats them as employees for certain tax purposes, so the employer handles their Social Security and Medicare taxes.

 

[Watson]

A statutory employee is a worker who is treated as an employee for certain tax purposes, even if their work setup looks like an independent contractor. According to the Internal Revenue Service, employers must withhold Social Security and Medicare taxes for these workers, but not federal income tax. This category typically includes specific roles like certain drivers or salespeople and falls between a traditional employee and a contractor.

 

[alinajoseph]

A statutory employee is a worker classified as an employee for certain tax purposes but treated like an independent contractor in other ways. Under rules set by the Internal Revenue Service, employers withhold Social Security and Medicare taxes, but not federal income tax. Common examples include some drivers and sales agents. They receive a W-2 Form with a special designation.