IRS Tax Considerations

Question 1

To be considered as an independent contractor, the licensee must meet which 3 specific criteria set by the IRS?

Answer 1

1) hold an active real estate license
2) Must agree in writing to not be treated as an employee for federal tax purposes
3) At least 90% of income must be based on sales production rather than hours worked

Question 2

What percentage of income must be based on sales production to be considered as an independent contractor?

Answer 2

90%

Question 3

Every sponsoring broker who hires licensees or has an independent contractor relationship with a licensee must have a written ___ or ___ agreement.

Answer 3

Employment agreement or independent contractor agreement

Question 4

The ___ or ___ defines the employment or independent contractor relationship with a sponsoring broker.

Answer 4

Employment agreement or independent contractor agreement

Question 5

Employment agreements and independent contractor agreements must be maintained for ___ years after the broker licensee is no longer employed with the sponsoring broker

Answer 5

Five

Question 6

If a licensee is considered as a(n) ___ to a sponsoring broker, federal law requires the sponsoring broker to withhold social security tax and income tax from wages.

Answer 6

employee

Question 7

Sponsoring brokers must withhold ___ and ___ from wages of licensees considered as an employee

Answer 7

Social Security
Income tax

Question 8

___ might receive benefits such as health insurance, profit sharing plans, or workers compensation

Answer 8

Employees

Question 9

A(n) ___ is a person working an average of 20 hours per week for a person or entity who would be considered as an employee under IRS rules for classifying workers

Answer 9

Regular employee

Question 10

___ are responsible for paying their own income taxes and social security.

Answer 10

Independent contractors