What Are Statutory Nonemployees?
A statutory nonemployee is defined by law and is treated as self-employed for federal tax purposes, including income, social security, and Medicare taxes.
Statutory Nonemployees Include:
- Direct sellers
- Qualified real estate agents
- Certain companion sitters
A statutory nonemployee is not subject to withholding taxes and therefore, is not issued Form W-2.
Form 1099-MISC is issued to statutory nonemployee's. Box 7 of Form 1099-MISC is used to enter nonemployee compensation.
Schedule C and Self-Employment Taxes for Statutory Nonemployees
A statutory nonemployee reports income and expenses on Schedule C just like a sole proprietor. Net profit or loss is carried to Form 1040.
Since no social security or Medicare taxes are withheld from a statutory nonemployee's income, these taxes must be paid by the statutory nonemployee via self-employment taxes (Schedule SE).
Schedule C and Schedule SE are filed with Form 1040.
Need to File Your Personal or Small Business Taxes?
File your personal and small business taxes (Schedule C)
- Return to the Hiring Workers Table of Contents to find related links