Publication 80 - Federal Tax Guide (Circular Ss) - Internal Revenue Service - 2012 Page 5
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25Treating employees as nonemployees. If you incor-
the details of how the services are performed. See Publica-
tion 15-A, Employer’s Supplemental Tax Guide, for more
rectly treated an employee as a nonemployee and did not
information on how to determine whether an individual
withhold social security and Medicare taxes, you will be
providing services is an independent contractor or an em-
liable for the taxes. See Treating employees as nonem-
ployee.
ployees under Who Are Employees? in Publication 15
Generally, people in business for themselves are not
(Circular E), for details on Internal Revenue Code section
employees. For example, doctors, lawyers, veterinarians,
3509, which may apply.
and others in an independent trade in which they offer their
IRS help. If you want the IRS to determine if a worker is an
services to the public are usually not employees. However,
employee, file Form SS-8, Determination of Worker Status
if the business is incorporated, corporate officers who work
for Purposes of Federal Employment Taxes and Income
in the business are employees. If an employer-employee
Tax Withholding.
relationship exists, it does not matter what it is called. The
employee may be called an agent or independent contrac-
Husband-Wife Business
tor. It also does not matter how payments are measured or
paid, what they are called, or if the employee works full or
part time.
If you and your spouse jointly own and operate a business
and share in the profits and losses, you are partners in a
Statutory employees. There are also some special defi-
partnership, whether or not you have a formal partnership
nitions of employees for social security, Medicare, and
agreement. See Publication 541, Partnerships, for more
FUTA taxes.
details. The partnership is considered the employer of any
While the following persons may not be common law
employees, and is liable for any employment taxes due on
employees, they are considered employees for social se-
wages paid to its employees.
curity and Medicare purposes if the conditions under
Exception —Qualified Joint Venture. If you and your
Tests, discussed below, are met.
spouse materially participate as the only members of a
a. An agent (or commission) driver who delivers food or
jointly owned and operated business, and you file a joint
beverages (other than milk) or picks up and delivers laun-
Form 1040 or joint Form 1040-SS, you can make a joint
dry or dry cleaning for someone else.
election to be taxed as a qualified joint venture instead of a
partnership. See the Instructions for Schedule C (Form
b. A full-time life insurance salesperson who sells prima-
1040) or the Instructions for Form 1040-SS. Spouses
rily for one company.
electing qualified joint venture status are treated as sole
proprietors for federal tax purposes. Either of the sole
c. A homeworker who works by the guidelines of the
proprietor spouses may report and pay the employment
person for whom the work is done, with materials furnished
taxes due on wages paid to the employees, using the EIN
by and returned to that person or to someone that person
of that spouse’s sole proprietorship. For more information
designates.
on qualified joint ventures, visit IRS.gov and enter the
keywords Qualified Joint Venture in the search box. Then
d. A traveling or city salesperson (other than an
select “Election for Husband and Wife Unicorporated Busi-
agent-driver or commission-driver) who works full time
nesses.”
(except for sideline sales activities) for one firm or person
getting orders from customers. The orders must be for
Farm Crew Leaders
merchandise for resale or supplies for use in the cus-
tomer’s business. The customers must be retailers, whole-
You are an employer of farmworkers if you are a crew
salers, contractors, or operators of hotels, restaurants, or
leader. A crew leader is a person who furnishes and pays
other businesses dealing with food or lodging.
(either on his or her own behalf or on behalf of the farm
Tests. Withhold social security and Medicare taxes
operator) workers to do farmwork for the farm operator. If
from statutory employees’ wages if all three of the following
there is no written agreement between you and the farm
tests apply.
operator stating that you are his or her employee, and if
you pay the workers (either for yourself or for the farm
1. The service contract states or implies that almost all
operator), then you are a crew leader.
of the services are to be performed personally by
them.
3. Employee’s Social Security
2. They have little or no investment in the equipment
and property used to perform the services (other
Number (SSN)
than an investment in transportation facilities).
3. The services are performed on a continuing basis for
An employee’s social security number (SSN) consists of
the same payer.
nine digits separated as follows: 000-00-0000. You must
Persons in a or d, earlier, are also employees for FUTA tax
get each employee’s name and SSN and enter them on
purposes if tests 1 through 3 are met (U.S. Virgin Islands
the employee’s wage and tax statement, Form W-2AS,
only).
W-2CM, W-2GU, or Form W-2VI. If you do not report the
Publication 15-A gives examples of the em-
employee’s correct name and SSN, you may owe a pen-
ployer-employee relationship.
alty unless you have reasonable cause. See Publication
1586, Reasonable Cause Regulations and Requirements
Statutory nonemployees. Certain direct sellers, real es-
for Missing and Incorrect Name/TINs, for information on
tate agents, and companion sitters are, by law, considered
the requirement to solicit the employee’s SSN.
nonemployees. They are generally treated as
self-employed for employment tax purposes. See Publica-
Employee’s social security card. You should ask the
tion 15-A for details.
employee to show you his or her social security card. The
Publication 80 (2012)
Page 5
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