IRS 3-category test + ABC test · client-side

employee vs contractorIRS worker classification1099 vs W-2ABC test Californiaworker misclassificationIRS SS-8independent contractor test

//// Tax · Classification

Employee or Independent Contractor?

11-question IRS classification test with ABC test scoring. Find your misclassification risk level (Low / Medium / High) and get step-by-step guidance on what to do next.

401(k) Limit 2024$23,000(+$7,500 catch-up 50+)

Roth IRA Limit$7,000(MAGI phase-out applies)

S&P 500 Avg Return~10%/yr(nominal, historical)

Misclassification risk

Low Risk

Likely IC · 0 of 11 employee signals

IRS Test

Likely IC

ABC Test

Passes

Behavioral Control0/4 employee signals

Does the company set or control your work schedule / hours?

Are you required to work at a specific company location?

Does the company provide your tools, equipment, or software?

Did the company train you on how to perform the work?

Financial Control0/3 employee signals

Does the company prohibit or discourage you from working for other clients?

Did the company set your rate (you did not negotiate it)?

Are you paid a flat rate with no ability to profit more or lose money?

Type of Relationship0/4 employee signals

Is there a written independent contractor agreement in place?

Yes

Does the company provide benefits (health insurance, PTO, retirement)?

Is the engagement ongoing with no defined end date?

Is your work integral to the company's core / regular business activity?

Behavioral

0/4

employee signals

Financial

0/3

employee signals

Relationship

0/4

employee signals

Recommendation

Your situation looks consistent with independent contractor status. The IRS test and ABC test both support this classification.

→Keep a written IC agreement on file.
→Invoice the company — do not fill out a W-4.
→Pay quarterly estimated taxes (SE tax + income tax).

ABC Test (CA, NJ, MA — stricter than IRS)

Prong APASS

Free from control

Worker is free from direction and control of the hiring entity.

Prong BPASS

Outside usual business

Work is outside the usual course of the hiring entity's business.

Prong CPASS

Established trade

Worker is customarily engaged in an independently established trade or business.

Under the ABC test, a worker is presumed to be an employee unless the hiring entity proves all three prongs. CA's AB5 law applies this test broadly. Failure on any single prong means employee status in these states.

Behavioral control score

schedule + location + tools + training

0 + 0 + 0 + 0

= 0 / 4

Higher score = more employee-like behavioral control. This is the strongest IRS factor.

Financial control score

exclusivity + rate-setting + no profit/loss risk

0 + 0 + 0

= 0 / 3

True independent contractors can profit or lose, set their own rates, and serve multiple clients.

Relationship type score

no written contract + benefits + indefinite + core work

0 + 0 + 0 + 0

= 0 / 4

A written IC agreement is a contractor signal (absence = employee signal). Benefits and permanent, core work indicate employee status.

Total employee signals

behavioral + financial + relationship

0 + 0 + 0

= 0 / 11

0–2: IC, 3–5: unclear, 6+: likely employee. Behavioral control can override at score ≥ 3.

IRS classification

= Likely IC

The IRS weighs all factors holistically — no single factor is determinative. This score is a strong indicator, not a legal determination.

ABC test — Prong A (free from control)

NOT (controls schedule OR controls location OR provided training)

= PASS ✓

Used in CA (AB5), NJ, MA, and other states. All 3 prongs must pass to be classified as IC.

ABC test — Prong B (outside usual business)

work is NOT integral to company's core business

= PASS ✓

This is the strictest prong — if you do what the company does, you are presumed an employee.

ABC test — Prong C (established trade)

NOT (exclusivity + company-set rate + no profit/loss risk)

= PASS ✓

You must be independently established — meaning you operate as a business separate from this engagement.

ABC test result

= Passes ABC test (IC)

All 3 ABC prongs pass — IC classification is supported under state ABC tests.

Overall misclassification risk

= Low Risk

Low risk: IRS and ABC tests both support IC status.

Key insight

0 of 11 IRS factors indicate employee status. Your situation passes the ABC test.

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