Tax Tip 1 Are you considered self -employed??

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Who Is Considered Self-Employed?


Self-Employed

You are self-employed if either of the following applies to you:

* You carry on a trade or business as a sole proprietor; or
* You are a member of a partnership or limited liability company that files a Form 1065, U.S. Return of Partnership, that carries on a trade or business.

You are also self-employed if you have a part-time business, in addition to your regular job.

Independent Contractor

The general rule is that an individual is an independent contractor if (the person for whom the services are performed) 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 or method of accomplishing the result.

People such as lawyers, contractors, subcontractors, public stenographers, and auctioneers who follow an independent trade, business, or profession in which they offer their services to the public, are generally not employees. However, whether such people are employees or independent contractors depends on the facts in each case. The earnings of a person who is working as an independent contractor are subject to Self-Employment (SE) tax.

References/Related Topics

* Worker Classification Webcast
A critical issue for all businesses is properly classifying workers as employees or independent contractors. The IRS’s archived Tax Talk Today Webcast, “What’s Hot in Employment Taxes: Independent Contractor or Employee?”, focuses exclusively on worker classification issues.
* Refer to Independent Contractors vs. Employees (Worker Classification) for helpful information in determining your status as an employee or an independent contractor.
* Self-Employed Individuals

More info on this topic avail at irs.gov