34% S-Corp Shareholder is Statutory Employee?

[RitaB]

I have zero experience with statutory employees, I've read the thing at irs.gov, and know I've got to pin my guy down on exactly what he does, but this does not smell right to me here at the outset.  Anybody seen an S-Corp Owner that's really a statutory employee?  I know the benefit to him with the deductions on Sch C. 

https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Statutory-Employees

[RitaB]

One more thing, it's not an accidental "X" in the box for statutory.  He came to me in July to get estimated payment vouchers and told me he'd be a statutory employee.  He did not tell me it would be for an S-Corp where he owned 34% of the shares.

[RitaB]

One more thing.  (I feel like Columbo.)  The tax savings with Sch C deductions vs Sch A is less than $500, so I am not inclined to fret over it too much.  None, actually.   He's not overstating deductions, pays a truck load of taxes, gives a lot to charity.  Misses Education Credits and Tuition and Fees deduction.  But I am curious as to whether it's correct.

[jasdlm]

I do not know what your guy does, but if he owns 34% of the S-Corp, how can he  "not have a substantial investment in the equipment and property used to perform the service"?

I have absolutely no experience - just wondering.

 

[RitaB]

53 minutes ago, jasdlm said:

I do not know what your guy does, but if he owns 34% of the S-Corp, how can he  "not have a substantial investment in the equipment and property used to perform the service"?

That is exactly what I was wondering, too.  The S-Corp has hired a professional that appears to be more successful than me at billing at least, and I hope he has asked this question, too.  I'm printing the article at the link I posted and giving it to client.

[Lion EA]

I do know it's pretty specific occupations.  But, even if one of those (insurance agent, for instance?) I don't know if being an S-corp shareholder/employee trumps statutory employee.  Are you an NATP member?  This might be a good use of your annual free question with cites.

[RitaB]

8 minutes ago, Lion EA said:

I do know it's pretty specific occupations.  But, even if one of those (insurance agent, for instance?) I don't know if being an S-corp shareholder/employee trumps statutory employee.  Are you an NATP member?  This might be a good use of your annual free question with cites.

Thanks, Ladies, for the input.  He may fit the fourth employee type.  It's a marketing company.  I'm giving him the rules, and if he's been wrongly classified, they can correct their docs or get it right next time.   I think that's all the responsibility I have here.  I know I've spent more time thinking about it than I had.  This is why I'm a derelict laundress.  Why do I worry so much?

[RitaB]

24 minutes ago, RitaB said:

He may fit the fourth employee type... Why do I worry so much?

Third.  See what I mean?