Statutory employees report their expenses as deductions in which manner?

Statutory employees are individuals who work for an employer but do not fit the traditional category of employees, primarily due to the nature of their work and the manner in which they are compensated. Unlike regular employees, statutory employees can deduct their business-related expenses directly on Schedule C, which is used to report income or loss from a business operated or a profession practiced by the taxpayer.

By reporting expenses on Schedule C, statutory employees can treat their income as self-employment income, which allows them access to more favorable tax deduction rules. This includes deducting eligible business expenses directly related to their work, such as supplies or work-related travel expenses, which helps to lower their taxable income.

Other options do not apply to statutory employees. For instance, miscellaneous itemized deductions are typically related to unreimbursed employee expenses but are often subject to limitations and were eliminated for most taxpayers under the Tax Cuts and Jobs Act. Ordinary business expenses, while they may sound correct, do not provide the specificity required for the individual circumstances of statutory employees — instead, these employees explicitly use Schedule C for accurate reporting. Finally, unreimbursed employee expenses refer to a general category that applies to regular employees and typically does not provide the same levels of deductions available to statutory employees.

Thus,