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.

Talk to a Lawyer

Need help? Start here.

How it Works

  1. Briefly tell us about your case
  2. Provide your contact information
  3. Choose attorneys to contact you
FEATURED LISTINGS FROM NOLO
Swipe to view more
NEED PROFESSIONAL HELP ?

Talk to a Business Law attorney.

How It Works

  1. Briefly tell us about your case
  2. Provide your contact information
  3. Choose attorneys to contact you