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IRS Common Law Factors
IRS 20 Factor Test

The Internal Revenue Service has created a series of questions based on common law principles to determine a worker’s status under the tax laws. The relevant issues fall into three main categories: behavioral control, financial control and relationship of the parties. In each case, it is very important to consider all the facts. No single fact assures that you are an independent contractor. Below is a 20-point question checklist that has been established by the IRS. Please note this 20 factor test is only designed as a guideline for determining whether an individual is an employee.

  1. Must the individual take instructions from company management staff regarding when, where, and how work is to be done?
  2. Does the individual receive training from company?
  3. Is the success or continuation of the company's business operations somewhat dependent on the type of service provided by the individual?
  4. Must the individual personally perform the contracted services?
  5. Has the individual hired, supervised, or paid individuals to assist the worker in completing the project stated in the contract?
  6. Is there a continuing relationship between the company and the individual?
  7. Must the individual work set hours?
  8. Is the individual required to work full time at the company?
  9. Is the work performed on company premises?
  10. Is the individual required to follow a set sequence or routine in the performance of his or her work?
  11. Must the individual provide reports to the company's management regarding his/her work?
  12. Is the individual paid by the hour, week, or month?
  13. Does the company reimburse the individual for business/travel expenses?
  14. Does the company supply the individual with needed tools or materials?
  15. Has the company made a significant investment in facilities used by the individual to perform services?
  16. Is the individual free from suffering a loss or realizing a profit based on his or her work?
  17. Does the individual only perform services for the company?
  18. Does the individual limit the availability of his or her services to the general public?
  19. Does the company have the right to discharge the individual?
  20. May the individual terminate his or her services at any time?

Answering No to the first 16 questions and “Yes” to questions 17-20 generally indicate independent contractor status, although they do not guarantee it. The experienced account support team at netPolarity can help you determine your employment status and help protect you from additional tax liabilities.

The information provided in this website is only intended to be general summary information to the public. It is not intended to take the place of legal advice or specific laws and regulations. This website provides general information about the law, designed to help users understand their legal needs, however, no guarantee is made that the information provided in this website is correct, complete, or current. The information contained on this website is not intended to be relied upon in any manner as legal advice, which is the application of law to an individual's specific circumstances. While we use our best efforts to ensure that the information on this website is current and accurate; it is recommended that you seek legal advice from an attorney as to the application of any information on this website and your interpretation of it, to your particular situation. netPolarity is not responsible for, and expressly disclaims all liability for damages of any kind arising out of use, reference to, or reliance on any information contained within the site.
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