If it is still unclear whether a worker is an employee or an independent contractor after reviewing the three categories of evidence, then Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding PDF, can be filed with the IRS. Finally, document each of the factors used in coming up with the determination. The keys are to look at the entire relationship and consider the extent of the right to direct and control the worker. Also, factors which are relevant in one situation may not be relevant in another. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor and no one factor stands alone in making this determination. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor.
pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?īusinesses must weigh all these factors when determining whether a worker is an employee or independent contractor.
Type of Relationship: Are there written contracts or employee type benefits (i.e.Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.).Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?.Common Law Rulesįacts that provide evidence of the degree of control and independence fall into three categories: In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered. The person performing the services may be:
#Independent contractor expenses lists how to
Follow the rest of this page to find out more about this topic and what your responsibilities are.ĭetermining Whether the Individuals Providing Services are Employees or Independent Contractorsīefore you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. If you are a business owner hiring or contracting with other individuals to provide services, then you must determine whether the individuals providing services are employees or independent contractors.
Generally, you must withhold and pay income taxes, social security taxes and Medicare taxes as well as pay unemployment tax on wages paid to an employee. It is critical that business owners correctly determine whether the individuals providing services are employees or independent contractors.
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