Salesperson

Making your living in sales can mean you rely on commissions just as much as your normal wages. At tax time, you will receive a Form , from your employer. As a salesperson, you may be classified as a . Generally, statutory employees have Box 13 of their W-2 checked, and have to report their income on a Schedule C. These types of employees include:

  • Those who make a living full-time as a life insurance salesman
  • Drivers who work for an agency or work off commission
  • Traveling sales representatives
  • Homeworkers who sell from their residence

Any income you receive from sales in addition to your regular job may classify as . If any company or organization other than the one whom you are employed with regularly pays you commission, bonuses, or other monies, you’ll generally have to classify it as self-employment income, which means you’ll have pay the self-employment tax on any income over $400 dollars.

However, if you are an , you can deduct certain expenses that are related to your job. To do so, claim these non-reimbursed deductions as a 2% limited miscellaneous itemized deduction. As with any deduction, you should keep appropriate documentation, such as receipts. You can deduct a variety of expenses, including:

  • Trade journals or publications that you pay for
  • or professional association fees
  • Protection from liability insurance
  • Any equipment or tools replaced within one year
  • Uniform costs, provided they are required and not suitable for everyday attire.
  • Any licensing fees, from the state or local government, as long as not paid for the first license.
  • Car and truck expenses if used for business purposes.
  • Traveling expenses for business trips, provided you are away longer than the average day’s work (can either use actual expense deduction or standard deduction)

For work related training you are able to deduction only if they meet specific requirements. Education courses have to be qualifying refresher courses, classes that handle recent developments, and vocational courses. If any class you take helps qualify you for a new trade or occupation, it cannot be deducted.

If you classify as a sales representative, you may deduct additional expenses when you file a schedule C. These additional deductions can include:

  • Bad business debts
  • Employee salaries or other commissions you pay
  • Any fees incurred for legal or professional services
  • Rental expenses for property used by the business
  • Advertising costs
  • Repair and maintenance fees for equipment
  • Supplies necessary and ordinary to run the business
  • Excise and personal taxes imposed