Are you an Independent Contractor or an Employee? – The IRS 20 Questions Test

The IRS wants to make sure you pay your fair share of income taxes, and they would rather get it sooner than later.  If you are classified as an employee, the employer must withhold taxes – and you may not be able to take the business expense deductions associated with your business that you are entitled to. Employers report payments to employees on a W-2 form, and to independent contractors on a 1099 form.  The line between independent contractor and employee can be a gray one.  As an independent contractor, it is important that you become familiar with this issue.   In 1987, the IRS published a list of 20 questions as a guideline.  Some time later, they identified three categories of evidence that may be relevant: (1) behavioral control; (2) financial control; and (3) relationship of the parties.  For the latest information, direct from the IRS, click here.

Access the IRS 20 questions here

Note: Membership in a professional organization such as PATCA could help establish your status as an independent contractor.