BoomTax Tools
Employee vs Contractor Questionnaire
Walk through the worker-classification factors that help determine whether W-2 or 1099 reporting is the better fit.
Behavioral
Types of Instruction
Does the worker have control over when and where to do the work?
A worker is an employee when the business has the right to direct and control the worker. The business does not have to actually direct or control the way the work is done.
Types of Instruction
Does the worker have control over what tools or equipment to use?
A worker is an employee when the business has the right to direct and control the worker. The business does not have to actually direct or control the way the work is done.
Types of Instruction
Does the worker have control over what additional workers can be hired or assist with the work?
A worker is an employee when the business has the right to direct and control the worker. The business does not have to actually direct or control the way the work is done.
Types of Instruction
Does the worker have control over where to purchase supplies and services to complete the job?
A worker is an employee when the business has the right to direct and control the worker. The business does not have to actually direct or control the way the work is done.
Types of Instruction
Does the worker have control over which specific work must be performed by a specific individual?
A worker is an employee when the business has the right to direct and control the worker. The business does not have to actually direct or control the way the work is done.
Types of Instruction
Does the worker have control over what order or sequence must be followed when performing the work?
A worker is an employee when the business has the right to direct and control the worker. The business does not have to actually direct or control the way the work is done.
Degree of Instruction
Is the worker free to do the job with their own judgement and control?
The key consideration is whether the business has retained the right to control the details of a worker's performance or instead has given up that right.
Evaluation System
Is the degree of work preformed by the worker evaluated at the end once the job has been completed?
This is different from a step-by-step evaluation and only evaluated at the end.
Training
Is the worker expected to know how to successfully handle the specified job without the need for additional training?
This can include periodic or on-going training about procedures and methods.
Significant Investment
Does the worker have a significant investment in the equipment he or she uses in working for someone else?
There are no precise dollar limits that must be met in order to have a significant investment.
Unreimbursed expenses
Does the worker have fixed ongoing costs that are incurred regardless of whether work is currently being performed?
Opportunity for profit or loss
Does the worker have the possibility of incurring a loss after completing the work?
For example, the worker has a significant investment in the tools and equipment used and if the worker has unreimbursed expenses, the worker has a greater opportunity to lose money.
Services available to the market
Does the worker often advertise, maintain a visible business location, and is available to work in the relevant market?
Method of payment
Is the worker paid by a flat fee for the job guaranteed and not a regular wage amount for an hourly, weekly, or other period of time?
Some professions, such as lawyers, may pay be paid hourly as independent contractors as this is the normal calculated rate.
Permanency of the Relationship
Will the worker be finished with the business once the specific project or period has come to an end?
Based on your answers, the likelihood you can categorize this worker:
According to the IRS, "There is no 'magic' or set number of factors that 'makes' the worker an employee or an independent contractor and no one factor stands alone in making this determination."
Requirements Checklist
-
-
-
E-File
-
Recipient Copy
The information provided by this wizard is for educational purposes only. Always consult with a tax or legal professional to determine the correct information for your filing situation. BoomTax does not provide tax or legal advice.