One of our readers pointed out that the IRS recently updated its test for determining whether or not an employee is an independent contractor. The following information was copied from their website:
Facts that provide evidence of the degree of control and independence fall into three categories:
- Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
- 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.)
- Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?
After reviewing the three categories of evidence, if you are still unsure if a worker is an employee or an independent contractor, the business can file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding (PDF) with the IRS. The form may be filed by either the business or the worker. The IRS will review the facts and circumstances and officially determine the worker’s status.
Be aware that it can take up to six months to get a determination, but a business that continually hires the same types of workers to perform particular services may want to consider filing the Form Form SS-8 (PDF).
Steven C. Wyer says
Facts that provide evidence of the degree of control and independence fall.
Zerona Littleton says
Well, they are an independent contractor if they simply sign a contract to work and pay their own taxes right?
Actually, they are a free foreman in the event that they just sign an agreement to work and pay their own particular duties right?
We have some permanent members of staff but due to the industry we are in we can not say how busy we will be in several weeks time, therefore some staff have to be contractors.
Vincent Ladinez says
The more you control the time and place and method to work of the worker, the more they are considered contractors. This is a great article thank you for posting.
Alicia Larsen says
The point is that standards should really be reached to assure that employees are actually independent contractors. A thorough profile check should be done upon interview to make sure everything works well.
errorboss csrss.exe says
It shouldn’t be a 6-month process to determine if you are hiring an independent contractor, is it? I was under the impression it was something that could be handled in a week or 2, at most.