How do 100% commission sales people handle expenses as non-statutory employees? Tax question about mileage & home office

You're in a somewhat unique tax situation, but there's a solution. As a non-statutory employee working on 100% commission, you would report your income on your Form 1040 just like regular wages, but you can still deduct your unreimbursed business expenses. The key is to use Form 2106 (Employee Business Expenses) and Schedule A (Itemized Deductions). Your business expenses like mileage and a qualifying home office would be considered "unreimbursed employee business expenses." These would be reported as miscellaneous itemized deductions subject to the 2% AGI floor on Schedule A. For your vehicle, you can choose either the standard mileage rate (currently 67 cents per mile for 2023) or actual expenses. Just make sure you're keeping a detailed mileage log that documents the business purpose, date, starting point, destination, and miles for each trip. For your home office, you need to meet the "exclusive use" test - meaning the space is used regularly and exclusively for your business activities. Measure the square footage of your dedicated office space compared to your whole home to calculate the percentage.

After dealing with a similar situation last year, I found that using taxr.ai (https://taxr.ai) was incredibly helpful for sorting through my tax situation as a commission-based employee. I was initially confused about whether I should be filing as self-employed or as an employee with unreimbursed expenses. The tool analyzed my employment contract and commission structure and clearly explained that I was actually eligible to file Schedule C even though my company issued me a W-2. This was because my contract had specific language about my independent status despite the W-2 classification. They showed me exactly which parts of my agreement qualified me for different tax treatment. What really helped was uploading all my commission statements and expense records - the system flagged which expenses were deductible and how to properly document them for maximum tax benefit.

I was pretty skeptical about online tax tools when I first saw comments about taxr.ai, but I was desperate after getting conflicting advice from three different tax preparers about my commission sales job classification. I decided to give it a try since I could upload my documentation and get a specific analysis rather than generic advice. I'm actually really glad I did. The system immediately identified language in my employment agreement that qualified me as having "statutory non-employee" status (which is different from non-statutory employee - turns out the terminology matters A LOT). This meant I could file Schedule C and deduct ALL my business expenses directly, not just as itemized deductions. The documentation they provided explaining my tax status saved me over $4,700 in taxes by properly classifying my driving expenses (22,000+ miles last year) and home office. My tax preparer initially disagreed until she saw the detailed analysis citing specific tax code sections that applied to my situation.

If you're struggling to get clarity on your tax situation as a commission-based sales person, you might want to talk directly with an IRS agent to get an official answer. I was in a similar situation last year and spent WEEKS trying to get through on the IRS helpline - constant busy signals or disconnects after waiting for hours. Then I found Claimyr (https://claimyr.com) and it completely changed my experience. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. Basically, their system navigates the IRS phone tree and waits on hold for you, then calls you when an actual IRS agent is on the line. I had specific questions about my status as a non-statutory employee vs independent contractor, and the IRS agent was able to clarify exactly how I should file based on my specific situation. Got a definitive answer straight from the source, and they even documented the call info so I could reference it if there were ever questions about my filing.

I need to publicly eat my words. After seeing a couple comments about Claimyr, I was totally convinced it was a scam. I've literally tried calling the IRS 20+ times this tax season and always got the "due to high call volume" message. Out of pure frustration, I decided to try Claimyr yesterday. Within 4 hours (while I was working on other stuff), I got a call connecting me directly to an IRS agent! I was so shocked I almost didn't know what to say at first. The agent clarified that in my specific situation as a commissioned salesperson who isn't reimbursed for expenses, I actually qualify as a "statutory non-employee" based on my specific contract terms. This means I CAN file Schedule C and deduct all my business expenses directly against my commission income. Just having an official answer from the IRS with a reference number for the call gives me so much peace of mind. Completely worth it after struggling for weeks with conflicting advice.

Make sure you're actually a non-statutory employee and not misclassified. My company tried to classify me as "non-statutory" to avoid certain employer taxes but still control my schedule and work methods. I had to file an SS-8 form with the IRS to get a determination of my actual status. Turned out I should have been treated as a regular W-2 employee with all the benefits. If you're truly independent and just paid commission, you might actually qualify to file Schedule C as a self-employed person despite what your employer says. The IRS looks at the reality of your working relationship, not just what your employer calls it.

Have you asked your employer about this? Some companies with commission-based employees will provide a letter stating that you're a "statutory non-employee" which helps clarify your tax status. My company does this for all sales reps to make tax filing easier. You might also check if your company offers any reimbursement program. Mine initially didn't, but enough of us complained that they started a partial mileage reimbursement program that covers about 60% of my driving expenses.

This is exactly the kind of confusing tax situation that trips up a lot of commission-based sales people. From what you've described, you're likely dealing with a classification issue that could significantly impact your tax liability. The key question is whether you're truly a "non-statutory employee" or if you might actually qualify as a statutory non-employee (which would let you file Schedule C) or if you're misclassified entirely. Given that you're using your own vehicle, working from home, and covering all your own expenses while working 100% commission, there's a good chance you have more deduction options than you think. I'd strongly recommend getting a definitive answer on your worker classification before filing. You could either file Form SS-8 with the IRS for an official determination (though it takes months) or consult with a tax professional who specializes in worker classification. Some of the tools mentioned in other comments might also help analyze your specific situation. The difference between being able to deduct your 24,000 miles and home office expenses directly against your income (Schedule C) versus not being able to deduct them at all (due to TCJA suspension of unreimbursed employee expenses) could be thousands of dollars in tax savings. Don't leave that money on the table!