Previous Page: Publication 15 - Circular E, Employer's Tax Guide - 1. Employer Identification Number (EIN) Next Page: Publication 15 - Circular E, Employer's Tax Guide - 3. Family Employees Use   to find additional occurrences of topic items.

taxmap/pubs/p15-004.htm#TXMP7ca9e738 2. Who Are Employees?(p8)

Employee

Generally, employees are defined either under common law or under statutes for certain situations.

taxmap/pubs/p15-004.htm#TXMP35bbf766 Employee status under common law.(p8)

Generally, a worker who performs services for you is your employee if you have the right to control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed. See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee.

Generally, people in business for themselves are not employees. For example, doctors, lawyers, veterinarians, construction contractors, and others in an independent trade in which they offer their services to the public are usually not employees. However, if the business is incorporated, corporate officers who work in the business are employees.

If an employer-employee relationship exists, it does not matter what it is called. The employee may be called an agent or independent contractor. It also does not matter how payments are measured or paid, what they are called, or if the employee works full or part time.

taxmap/pubs/p15-004.htm#TXMP49939f3c Statutory employees.(p8)

If someone who works for you is not an employee under the common law rules discussed above, do not withhold federal income tax from his or her pay, unless backup withholding applies. Although the following persons may not be common law employees, they may be considered employees by statute for social security, Medicare, and FUTA tax purposes under certain conditions.

• An agent (or commission) driver who delivers food, beverages (other than milk), laundry, or dry cleaning for someone else.
• A full-time life insurance salesperson who sells primarily for one company.
• A homeworker who works by guidelines of the person for whom the work is done, with materials furnished by and returned to that person or to someone that person designates.
• A traveling or city salesperson (other than an agent-driver or commission-driver) who works full time (except for sideline sales activities) for one firm or person getting orders from customers. The orders must be for items for resale or use as supplies in the customer's business. The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging.

See Publication 15-A for details on statutory employees.

taxmap/pubs/p15-004.htm#TXMP2cb037f5 Statutory nonemployees.(p8)

Direct sellers, qualified real estate agents, and certain companion sitters are, by law, considered nonemployees. They are generally treated as self-employed for all federal tax purposes, including income and employment taxes. See Publication 15-A for details.

taxmap/pubs/p15-004.htm#TXMP078e64f6 Treating employees as nonemployees.(p8)

You will generally be liable for social security and Medicare taxes and withheld income tax if you do not deduct and withhold these taxes because you treated an employee as a nonemployee. See Internal Revenue Code section 3509 for details. Also see Special additions to tax liability under Prior Period Adjustments in section 13.

taxmap/pubs/p15-004.htm#TXMP7e9a839c Relief provisions.(p8)

If you have a reasonable basis for not treating a worker as an employee, you may be relieved from having to pay employment taxes for that worker. To get this relief, you must file all required federal tax returns, including information returns, on a basis consistent with your treatment of the worker. You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977.

taxmap/pubs/p15-004.htm#TXMP69dd3945 IRS help.(p9)

If you want the IRS to determine whether a worker is an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.

Previous Page:  Publication 15 - Circular E, Employer's Tax Guide - 1. Employer Identification Number (EIN) Next Page:  Publication 15 - Circular E, Employer's Tax Guide - 3. Family Employees Use   to find additional occurrences of topic items.