Updated October 24, 2026. Quick answer: Tax Topic 762 is the IRS page on whether a worker is an independent contractor or an employee for federal employment tax. It says the common law rules apply and groups the evidence into three categories: behavioral control, financial control, and the relationship of the parties.
Quick reference
| Item | What the IRS topic says |
|---|---|
| Which rules apply | “For federal employment tax purposes, the usual common law rules are applicable to determine if a worker is an independent contractor or an employee.” |
| What to examine | “You should consider all evidence of the degree of control and independence in this relationship.” |
| Behavioral control | “Behavioral control covers facts that show if the business has a right to direct and control what work is accomplished and how the work is done, through instructions, training, or other means.” |
| Financial control | “Financial control covers facts that show if the business has a right to direct and control the financial and business aspects of the worker’s job.” |
| Relationship of the parties | “Relationship of the parties covers facts that show the type of relationship the parties had.” |
| Asking the IRS | “If you want the IRS to determine if a specific individual is an independent contractor or an employee, file Form SS-8” |
The common law test
The IRS topic says “Under the common law, you must examine the relationship between the worker and the business.” It names the three groups of facts: “The facts that provide this evidence fall into three categories” Those are behavioral control, financial control, and relationship of the parties.
For behavioral control, the topic says “Behavioral control covers facts that show if the business has a right to direct and control what work is accomplished and how the work is done, through instructions, training, or other means.” Our page on 1099-NEC box 1 covers what a business reports for a contractor.
Financial control and the relationship
Financial control is described as “Financial control covers facts that show if the business has a right to direct and control the financial and business aspects of the worker’s job.” The topic lists these facts: “The extent to which the worker has unreimbursed business expenses”; “The extent of the worker’s investment in the facilities or tools used in performing services”; “The extent to which the worker makes their services available to the relevant market”; “How the business pays the worker, and”; and “The extent to which the worker can realize a profit or incur a loss”.
For the relationship, the topic lists “Written contracts or oral agreements describing the relationship the parties intended to create”; “Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay”; “The permanency of the relationship, and”; and “The extent to which services performed by the worker are a key aspect of the regular business of the company”.
Where to go for more
The topic points to several resources. It says “For more information, refer to Publication 15-A, Employer’s Supplemental Tax Guide, Publication 1779, Independent Contractor or Employee PDF and Independent contractor (self-employed) or employee?”
For a ruling, the topic says “If you want the IRS to determine if a specific individual is an independent contractor or an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.” For self employed workers, our pages on self employment tax and Schedule SE cover the tax side.
Where this comes from
This page describes the IRS page titled Topic no. 762, Independent contractor vs. employee, as served on irs.gov on October 24, 2026. The IRS page shows that it was last reviewed or updated on 13 Oct 2026. The IRS can change a topic after we read it, and the IRS page controls. General information, not tax or legal advice.
Common mistakes
- Relying on one fact. The topic says to “consider all evidence of the degree of control and independence in this relationship”
- Assuming a written contract settles it. The contract is only one item under “Relationship of the parties”
- Looking only at how the work is done. The topic also covers “financial control” and the relationship of the parties
- Ignoring benefits. The topic lists “Whether the business provides the worker with employee-type benefits”
- Guessing when unsure. The topic names “Form SS-8” as the way to ask the IRS to decide for a specific individual
Related: IRS tax topics by number, 1099-NEC box 1: nonemployee compensation, 1099-NEC and 1099-MISC boxes explained, Self employment tax explained, Schedule SE (Form 1040), and Form 8919.
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Answer againSources
- IRS, Topic no. 762, Independent contractor vs. employee (irs.gov): https://www.irs.gov/taxtopics/tc762
- IRS, Tax topics index (irs.gov): https://www.irs.gov/taxtopics
Read from the IRS pages linked above on October 24, 2026. General information, not tax or legal advice. The IRS topic page and the instructions for your own form control, and your own facts decide the outcome.