Do employees complete their tax returns differently than self-employed persons?

Most taxpayers are familiar with Form 1040, but employees and self-employed taxpayers complete their returns differently. Taxpayers who are employees for income tax purposes can deduct their unreimbursed business expenses on Schedule A only if they itemize their deductions, and only to the extent their unreimbursed business expenses exceed 2% of their adjusted gross income. Tax-payers who are self-employed for income tax purposes report income and business expenses on Schedule C. They can deduct their business expenses on Schedule C even if they do not itemize. Unlike employees, they can deduct all of their business expenses.

For more information, view our Ministers Tax Guide.

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