How Does the IRS Decide Who Is an IC?
The IRS looks at a number of factors when determining whether a worker is an employee or an independent contractor. The agency is more likely to classify as an independent contractor a worker who:
can earn a profit or suffer a loss from the activity
furnishes the tools and materials needed to do the work
is paid by the job
works for more than one firm at a time
invests in equipment and facilities
pays his or her own business and traveling expenses
hires and pays assistants, and
sets his or her own working hours.
On the other hand, the IRS is more likely to classify as an employee a worker who:
can be fired at any time by the hiring firm
is paid by the hour
receives instructions from the hiring firm
receives training from the hiring firm
works full time for the hiring firm
receives employee benefits
has the right to quit without incurring liability, and
provides services that are an integral part of the hiring firm's day-to-day operations.