The Internal Revenue Service (IRS) has different guidelines and requirements that it has established for determing whether or not a work at home worker is a work at home independent contractor or employee. Knowing which way your position is designated will help you prepare your taxes properly. In most cases your employer will tell you your work at home classification, whether that is as an independent contractor or employee, but you'll want to make sure the classification is sound.  In the event that the IRS re-classifies your position, your tax returns may have been prepared incorrectly.

This information is not intended to render tax or legal advice.  Please consult the IRS or a competent accountant and/or attorney for actual accounting, tax or legal advice.

As a general rule, independent contractors enjoy more independence while work at home employees are more controlled by their employer.  Also, work at home contractors are generally paid by the project or piece work and don't receive benefits unlike work at home employees who are usually paid a salary and receive benefits.

A work at home position will be more likely to be classified as an independent contractor position if:

1. The worker may have unreimbursed business expenses from the work at home job
   
2. The worker is independent and the employer does not control how work is done, but rather only the end result that is delivered to the employer.
   
3. The Employer does not provide training to the employee or contractor.
   
4. The person who works at home provides his/her own assets or property for use while performing his/her work at home job.
   
5. The person that is working from home is independent... there is risk that the work at home worker may realize a profit or loss, hire others, control how work is done, and/or provide the same service to other employers.
   
6. There is a Work at home Contractors or other written Agreement governing the relationship.
   
7. The employer does not treat the work at home contractor the same way it treats other non-contractor employees, such as by providing the same benefits and rules.
   
8. The work at home position is more like an individual project or contract position rather than a regular, permanent job, although many work at home independent contractors work for the same companies for a very long time.
   

The sheer fact that you work at home suggests an element of independence although that in itself does not guarantee that your work at home job will be classified as a independent contractor status.

If you work at home you may use your own computer, telephone, furniture, home, automobile, equipment to perform your work. The fact that a work at home worker uses his/her own property to do the work, utilizes his/her own methods for doing the work and works independently at home are all key considerations, in addition to many others, when making a determination concerning whether a work at home job is an independent contractor position or regular employee position.

More information concerning work at home employees and independent contractors is available from the Internal Revenue Service, http://www.irs.gov (specifically, http://www.irs.gov/taxtopics/tc762.html ) and Publication 15-A at IRS.gov

This article on work at home was provided by Work-at-Home-101.com.