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IRS & Financial· 6 min read

Independent Contractor vs. Employee: How the IRS Decides

Calling a worker a 1099 doesn't make them one. The IRS uses three categories of facts to decide — and they bill back-taxes on misclassifications.

Worker classification is one of the most-audited areas of payroll tax compliance. The IRS uses a 20-factor test, summarized into three categories: behavioral control, financial control, and the nature of the relationship.

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