How many requirements set by the IRS must an independent contractor meet?

To qualify as an independent contractor according to IRS guidelines, an individual must satisfy three specific requirements that relate to the level of control and independence they have in their work. These components are often categorized under three criteria:

1. Behavioral Control: This refers to how much control the employer has over the work done by the contractor. If the worker can make decisions about how to carry out their tasks without oversight, this suggests they are an independent contractor.

2. Financial Control: This pertains to the economic aspects of the work relationship. If the contractor has the potential to lose money or earn a profit, and they have a significant investment in their tools or facilities, they align more closely with independent contractor status.

3. Type of Relationship: This includes the nature of the contract, such as whether there are written contracts, employee-type benefits, and the permanence of the relationship between the contractor and the business. Independent contractors typically have a more sporadic relationship, without benefits that are common in an employer-employee relationship.

Meeting all three requirements indicates that the worker is independent rather than an employee, which has implications for tax reporting and liability. By understanding these criteria, real estate professionals can correctly identify the nature of work relationships and ensure