IRS - Independent Contractor Regulations and Resources
IRS Independent Contractor Defined: People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors. However, whether these people are independent contractors or employees depends on the facts in each case. The general rule is that an individual is an independent contractor if the payer (business) has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax.
A worker is not an independent contractor if they perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if they are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed. If an employer-employee relationship exists (regardless of what the relationship is called), the worker is not an independent contractor and their earnings are generally not subject to Self-Employment Tax.
IRS Resources:
- IRS Website
- Independent Contractor (Self-Employed) or Employee?
- Understanding Employee vs Contractor Designation
- Small Business Workshops and Seminars listed by State
- Worker Classification Guidelines. Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be:
- An independent contractor
- An employee (common-law employee)
- A statutory employee
- A statutory nonemployee