You Make the Call - Aug. 13, 2026

Question: Maple Ridge Tax Services hired Jordan Lee for the 2026 filing season, Jan. 15 through April 15. Jordan prepares individual income tax returns at the firm’s office using the firm’s computers and tax software. The firm requires Jordan to work Monday through Friday from 9 a.m. to 5 p.m., follow its preparation and review procedures, attend weekly training and obtain a manager’s approval before contacting clients. Maple Ridge pays Jordan $34 per hour every two weeks and reimburses approved business expenses. Jordan can’t hire assistants, doesn’t advertise tax preparation services and doesn’t perform similar services for other businesses during the engagement. Jordan signed an agreement that labels Jordan an independent contractor and provides no employee benefits. Maple Ridge expects to pay Jordan $17,680 for 520 hours of work. For federal employment tax purposes, should Maple Ridge classify Jordan as an employee or an independent contractor?

Answer: Based on the facts provided, Jordan is a common-law employee for federal employment tax purposes. For Social Security and Medicare tax purposes, §3121(d)(2) includes an individual who has employee status under the usual common-law rules.

The IRS examines the entire relationship and groups the relevant facts into behavioral control, financial control and the type of relationship. The behavioral-control facts strongly indicate employee status because Maple Ridge controls Jordan’s schedule and work location, supplies the equipment and software, requires Jordan to follow firm procedures and provides ongoing training and supervision.

The financial-control facts also indicate employee status. Maple Ridge pays a regular hourly wage, reimburses approved expenses and provides the tools needed to perform the work. Jordan has no significant investment, can’t hire assistants, doesn’t offer the services to the market and has no meaningful opportunity for profit or risk of loss.

The relationship facts support the same conclusion because preparing tax returns is a key part of Maple Ridge’s regular business. The seasonal term, written independent contractor label and absence of employee benefits are relevant, but they don’t outweigh the firm’s extensive right to direct and control Jordan’s work.

Maple Ridge should treat the $17,680 as wages, withhold federal income tax and the employee share of Social Security and Medicare taxes, pay the employer share of Social Security and Medicare taxes and any applicable federal unemployment tax, and report the wages on Form W-2, Wage and Tax Statement. The firm should not report the compensation on Form 1099-NEC, Nonemployee Compensation.