Self-Employment 415-25-05-27

(Revised 10/1/14 ML# 3407)

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An individual who is working for themselves, rather than for an employer, is considered self-employed. The individual may be a contractor, franchise holder, owner/operator, partner, etc. The individual must meet the following criteria to be considered self-employed:

 

1. Earn the income directly from business or trade, not from wages or salary from an employer.
2. Be responsible for the payment of entire Social Security and Federal withholding taxes. [If an employee, the employer would pay half of their Social Security Tax and withhold federal income tax from the employee’s salary.]
3. File self-employment tax forms, however, not all individuals file tax forms. In these special circumstances, income must be anticipated.