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    Taxation: Factors for employee vs self-employed contractor

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    As a Revenue Agent at the IRS, we were trained to look for contract labor payments in order to verify that the payments were not to employees If it is shown the subcontractors were actually employees it would result in a substantial tax and penalties.

    What are the factors used to determine that a service provider is an employee versus a self-employed contractor?

    © BrainMass Inc. brainmass.com December 24, 2021, 9:55 pm ad1c9bdddf
    https://brainmass.com/business/human-resources-management/taxation-factors-employee-vs-self-employed-contractor-425484

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    Some of the facts and circumstances that will convince an IRS agent that labor payments should not be payroll include:

    1. Does the contractor make his own decisions about how to perform the work?
    2. Does the contractor use his own facilities as a place to perform the work?
    3. Does the contractor use his own tools and equipment in the work?
    4. Does the contractor hold himself out for hire to other companies for similar work?
    5. Does the contractor work on an irregular schedule as opposed to 40 hours per week?
    6. Is the contractor a 'real business' with insurance, business cards, a place of business, a telephone number, a website?

    These are presented from the opposite viewpoint than how the question is couched, but the facts are that if the contractor can say yes to a number of these conditions, they provide clear evidence of non-employee status.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    © BrainMass Inc. brainmass.com December 24, 2021, 9:55 pm ad1c9bdddf>
    https://brainmass.com/business/human-resources-management/taxation-factors-employee-vs-self-employed-contractor-425484

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