We have a mortgage broker client who receives a W-2 as an employee. We think he is an independent contractor or perhaps a tax-favored statutory employee.
When we filed his tax return, we made him a statutory employee because that allowed him to deduct his business expenses on Schedule C.
Now, the IRS has disallowed his business expenses on Schedule C and moved them to the itemized deduction category. Of course, miscellaneous itemized deductions are not deductible for the alternative minimum tax (AMT). This makes his itemized deductions disappear and causes him an unfair $20,000 increase in taxes.
Very Short History
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