If you work as a salesperson or sales representative, you should receive Form W-2, Wage and Tax Statement, from your employer. If you received a Form W-2 and the "Statutory employee" check box is marked in Box 13, report that income on Schedule C, Profit and Loss from Business. Statutory employees include:
Payments that you receive as an independent sales representative outside of or in addition to your regular job may be considered income from self-employment and are reportable on Schedule C. For example, self-employed income includes occasional sales commission payments, bonuses or referral fees received from a company other than your regular employer. For such arrangements, you may account for the income amounts yourself or you may receive a Form 1099-MISC, Miscellaneous Income. Self-employed income would also include amounts received as a sole proprietor providing independent sales services to one or more companies. If you are self-employed and your net earnings are $400 or more, you must pay self-employment tax on the income you report on Schedule C. In addition, you may need to make estimated payments to cover the amount of self-employment tax or income tax associated with the income you report on Schedule C.
As an employee, you may be able to reduce your taxes by deducting unreimbursed job-related expenses. These expenses may be claimed as 2% limited miscellaneous itemized deductions or, if based on self-employment income, they may be deducted on Schedule C. You should keep receipts to substantiate these expenses. Examples of some of the items you may be able to deduct include:
Travel expenses for traveling away from your business home if you are required to be away from home for longer than an ordinary day's work - examples of deductible travel expenses include transportation by air, bus, or car using the standard mileage rate or actual expenses, tolls and parking fees, lodging, and meals and entertainment (with limitations)
You also may be able to deduct work-related unreimbursed education courses or seminars if they meet certain requirements. Qualified education includes refresher courses, courses on current developments, and vocational courses. However, education that qualifies you for a new trade or business or that helps you to meet the minimum education requirements of your present trade or business is not deductible. For example, a soft drink sales representative cannot deduct the expenses for the study of marine biology as work-related education, although the tuition for such courses may qualify for the American Opportunity or Lifetime Learning Credit.
Additional unreimbursed expenses may be deductible if you are a self-employed sales representative filing Schedule C. Examples of some items you may be able to deduct include: