To determine whether a worker is an independent contractor or an employee, you must examine the relationship between the worker and the business. All evidence of control and independence in this relationship should be considered. The facts that provide this evidence fall into three categories – Behavioral Control, Financial Control, and the Type of Relationship itself.

Behavioral Control covers facts that show whether the business has a right to direct and control how the work is done, through instructions, training, or other means.

Financial Control covers facts that show whether the employer or business has a right to control the business aspects of the worker's job. This includes:

• The extent to which the worker has unreimbursed business expenses,
• The extent of the worker's investment in the business,
• The extent to which the worker makes services available to the relevant market,
• How the business pays the worker, and
• The extent to which the worker can realize a profit or incur a loss.
Facts covered by Type of Relationship include:
• Written contracts describing the relationship the parties intended to create,
• The extent to which the worker is available to perform services for other, similar businesses,
• Whether the business provides the worker with employee–type benefits, such as insurance, a pension plan, vacation pay, or sick pay, and
• The permanency of the relationship.

For more information, refer to Publication 15A (PDF), Employer's Supplemental Tax Guide. If you want the IRS to determine whether a specific individual is an independent contractor or an employee, file Form SS-8 (PDF).

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