1. Independent Contractor or Employee

Question 1

Employee

Answer 1

• Employed for salary or wages.
• Works under the supervision and control of an employer, who dictates when, where, and how tasks are performed.
• Employer provides equipment, office space, and fringe benefits (non-wage compensation or perks).
• Pays taxes through a W-2 form.

Question 2

Independent Contractor

Answer 2

• Self-employed but contracted by another entity to perform a job.
• Has control over expenses, schedule, and hiring/firing decisions.
• Paid based on job completion.
• Solely responsible for taxes and files a 1099 form.
• Required to keep written records of all transactions.

Question 3

Statutory Employee

Answer 3

• An independent contractor treated as an employee for tax purposes.
• Works for one company (IC can work for more than one)
• Pays income tax and half of Medicare and Social Security.

Question 4

Statutory Non-Employee

Answer 4

• treated as Independent Contractors if they meet specific criteria:
  1. paid based on sales/outputs (not hours)
  2. written contract must state that they will not be treated as employees for federal tax purposes.
  3. licensed
• when all is met they can file Schedule C for business deductions
• Real estate licensees are categorized as Statutory on employees

Question 5

2 codes found in NYCRR (NY Code of Rules and Regulations) directing operation of Indepndent Contractor relationships

Answer 5

175.21: Supervision of Salesperson by Broker
175.23: Records to be maintained

Question 6

175.23

Answer 6

a) Brokers must maintain records of sales for at least 3 years. - including:
1. Name and address of the buyer and seller.
2. Purchase contract or purchase price, and deposit amount
3. Amount of commission
4. Gross profit if purchased for resale
5. Any documents required under Article 12A of the Real Property Law.
6. Listing or commission agreements or buyer-broker agreements.
b) Broker Mortgage Loan Records:
If a broker grants a mortgage loan, they must keep additional records, such as the applicant’s name, amount of the loan, employment verification, and financial status

Question 7

175.21

Answer 7

a) Brokers must provide regular, frequent, and consistent personal guidance to salespersons.
b) Broker and Salespersons must maintain written records
c) Salespersons must work at least 35 hours per week for 50 weeks in each year

Question 8

IRS Code 3508 a)b)

Answer 8

• classifies employment in 4 ways: Independent Contractor, Employee, Statutory employee and Statutory non- employee