Worker classification for tax
For tax, a worker is an employee if you control what they do and how they do it; the IRS looks at behavioral, financial and relationship facts.
Source law: Internal Revenue Code, 26 U.S.C. 3121(d), 3509; IRS common-law rules · Source: NovaCopilot
Common questions
What you must do
- Classify each worker under the common-law control test (26 U.S.C. 3121(d)(2))
- Withhold income and FICA tax and issue Form W-2 to employees (26 U.S.C. 3102, 3402, 6051)
- Issue Form 1099-NEC to contractors paid $600 or more (26 U.S.C. 6041A)
Penalty
Liability for unpaid employment taxes at reduced or full rates, plus penalties and interest. (26 U.S.C. 3509, 6656)
Who is covered
Behavioral control · Financial control · Type of relationship
Checklist
- Control test documented
- W-2 or 1099 decided per worker
- Form SS-8 for unclear cases
- State test checked (ABC test in some states)
Related
topic:us:worker-classification · sha256 … · https://legal.exploreworldai.com/api/public/v1/topic-graph/us/worker-classification
Written from US federal law. State law may give more rights. Not legal advice.
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