Employee Work at home Moms versus Independent Contractor Work at home Moms... the IRS' perspective.
The Internal Revenue Service has rules about how it classifies employees into four (4) categories:
- Independent Contractor
- Common-Law (regular) employee
- Statuatory Employee
- Statutory Nonemployee
The latter two categories relate mostly to specific types of jobs. They may or may not relate to your particular work at home job.
The IRS does not have separate classifications for workers who work at home and working at home does not, in itself, determine which classification will apply to a specific job, but the fact that a job is done at home, especially if using property belonging to the individual doing the work (instead of the company), are important facts that may be considered.
The simple fact that you work at home does not in itself cause your work at home job to be classified as an independent contractor position.
Most often, if you work at home as an independent contractor you will be given an agreement to sign outlining the terms and conditions of your employment. Such agreements cover such things as property that will be used for the work at home job, who will pay taxes, what benefits are or are not available, etc.
The IRS considers facts that fall into three categories related to how much control an employer has over its workers or employees, including work at home employees: Behavioral Control, Financial Control and the Type of Relationship itself. As a general rule, the less control your employer has over you and the more control and independence you yourself have over your work at home job, the more likely it will be that you work at home as an independent contractor instead of a regular employee.
|
Work at home moms will be more likely to be classified as independent contractors if:
- She may have unreimbursed business expenses from the work at home job
- Her employer does not control how work is done, but rather only the end result that is delivered to the employer.
- Her Employer does not provide training to the work at home employee or contractor.
- She provides her own assets or property for use while performing her work at home job.
- The work at home opportunity is independent... whether she can realize a profit or loss, hire others, control how work is done, and/or provide the same service to other employers.
- There is a Work at home Contractors or other written Agreement governing the relationship.
- Her employer does not treat the contractor the same way it treats other non-contractor employees, such as by providing the same benefits and rules.
- Her work at home position is more like an individual project or contract position rather than a regular, permanent job, although thousand of independent contract positions are not temporary or based on individual projects.
The fact that work at home moms may use their own property to do the work, utilizes their own methods for doing the work and work independently at home are all key considerations, in addition to many others, when making a determination concerning whether a work at home job is an independent contractor position or regular employee position.
|
More information concerning work at home employees and independent contractors is available from the Internal Revenue Service, (http://www.irs.gov/taxtopics/tc762.html ) and Publication 15-A at IRS.gov.
