One of the characteristics of an independent contractor relationship is that the independent contractor has the ability to control where, when and how it performs its work. Special treatment for real estate agents was accepted by the IRS to settle brokers` liability if agents complied with these rules. The IRS said real estate agents, as well as direct sellers and some itters, are “legal non-obligations” for tax purposes. As such, they are considered self-employed for tax reasons, just like an independent contractor. Becoming an independent entrepreneur begins and ends with taking responsibility for your own business. No, the qualification of an independent legal holder under IRS rules only applies to federal income taxes. The IRS recognizes the uniqueness of the real estate sector and has created a legal status of self-employed for real estate professionals, provided that three elements are met: 1) The person is a licensed real estate professional; (2) the bulk of their payments are directly linked to turnover or any other production and not to the number of hours worked; and (3) their services are provided under a written contract that they are not treated as workers for federal tax purposes. If these three elements are met, no federal income tax is to be withheld on the income of the real estate expert. Employers have a considerable level of control over their employees and can control when, how and where employees perform their duties and responsibilities.
Employers often provide their employees with the necessary “craft tools”. .