![]() ![]() If the worker retains control over hiring, supervising, and paying helpers, this arrangement suggests an independent contractor relationship. If a University hires, supervises, and pays a worker's assistants, this control indicates a possible employment relationship. In contrast, independent contractors typically are free to assign work to anyone. Universities that insist on a particular person performing the work assert a degree of control that suggests an employment relationship. Workers whose services are integrated into business operations or significantly affect business success are likely to be considered employees. Requesting workers to undergo University provided training suggests an employment relationship since the University is directing the methods by which work is accomplished. If the University directs when, where, and how work is done, this control indicates a possible employment relationship. The 20 factors from Revenue Ruling 87-41 used to evaluate the validity of independent contractor classifications include: In addition, employers that request an IRS determination lose certain protections against liability for misclassification. ![]() NOTE: Employers uncertain about how to classify a worker can request an IRS determination by filing Form SS-8, "Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding." However, some tax specialists caution that IRS usually classifies workers as employees whenever their status is not clear-cut. The individual circumstances of each case determine the weight IRS assigns different factors. The more control a University exercises over how, when, where, and by whom work is performed, the more likely the workers are employees, not independent contractors.Ī worker does not have to meet all 20 criteria to qualify as an employee or independent contractor, and no single factor is decisive in determining a worker's status. ![]() Under IRS rules and common-law doctrine, independent contractors control the manner and means by which contracted services, products, or results are achieved. Independent contractors must pay estimated taxes each quarter, whereas employees generally have taxes withheld from their paychecks by their employer. For example, an employee shares the costs of Social Security and Medical taxes with his or her employer whereas an independent contractor is responsible for the entire amounts. employee carries with it many tax ramifications thus utilizing the appropriate classification is key. Independent Contractor Employee? – IRS Revenue Ruling 20 Factor Test
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