Important Tax Update for Independent Contractors

1. Do I direct or control the performance of specific tasks? Do I give training or instruction on how to perform different tasks? If the answers are yes, you are the employer.

2. Does my worker provide these same services to other employers? Can my worker make a profit or incur a loss while performing work for me? Does my worker have unreimbursed expenses from doing this work? If the answers are no, you are the employer.

3. Does the worker get benefits? Does the worker expect the relationship to be permanent? Are the services performed by the worker part of the business’s regular activities? If the answers are yes, you are the employer.

If you have any doubts about how the IRS would define the relationship between you and a worker, file Form SS-8 to receive a determination letter from the IRS. It is better to be safe, than sorry!