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What is self-employment?

Self-employment is a type of employment where the usual employer/employee relationship does not exist. The client often works for themselves rather than for an employer. In others, the client works for an employer who decides to hire the client but not as a regular employee. The employer does this in order to take advantage of laws concerning employment benefits, tax implications, and liability.

Who is self-employed?

The simplest way to identify this type of relationship is to ask good questions during the interview.

A person is self-employed if a he or she

  • labels him or herself as self-employed,
  • works for an employer who does not withhold income taxes or FICA (Federal Insurance Contributions Act) contributions from his or her pay, or
  • verifies he or she filed a tax return as self-employed despite the employer deducting income taxes or FICA contributions from his or her pay.

Self-employment income examples:

Self-employment includes odd jobs, small business owners, independent contractors, profit sharing, rental income, and boarding.

There are specialized rules for calculating the self-employment income derived from boarding income, rental income, and profit sharing income.

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