Question

Syd is an independent contractor driving for Uber. He currently uses his own car and drives whenever he chooses to supplement is full-time position as a factory assembly line worker. Please answer the following, briefly explaining your answers.

Is Syd be properly classified as independent contractor for federal income tax purposes?

Would the analysis be the same under the recent California supreme court (Dynamex) case?

What key factor do these two tests have in common?

Answer 1

1. According to Federal tax law Independent contractor is resposible for payment of federal and self employed taxes if his/her gross income is more than $3000 or if net income i.e., income less expenses is more than $400.

Therefore Syed is classified as an independent contractor for federal income tax purposes.

2. In California supreme court(Dynamex) case it is said that there is no set of definition of what an "Independent Contractor" is.It is relied on interpretations and previous court rulings.Some factors has to be considered to determine whether a worker is an independent contractor or an employee.

3. In both the cases there is no definite definition for Independent contractors.

Some key factors are considered to decide as an independent contractor or an employee as below

• whether the on performing has been engaged in any other business.
• the skill required in the particular occupation
• the length of time for which services are to be provided
• the method of payment whether by time or by job
• whether the work is related to the regular business of principal.