Here’s a formal Points and Authorities section on who is considered self-employed under U.S. tax law. This is based on statutory law (IRC), regulations, and IRS guidance.
POINTS AND AUTHORITIES – DEFINITION OF SELF-EMPLOYED INDIVIDUALS
I. Self-Employed Individuals Include Sole Proprietors, Independent Contractors, and Members of Certain Partnerships
Point
A person is considered self-employed if they carry on a trade or business as a sole proprietor, an independent contractor, or a member of a partnership that carries on a trade or business.
Authorities
- 26 U.S.C. § 1402(c) – Self-employment income – General Rule
Defines “self-employed individual” as an individual who has net earnings from self-employment. - IRS Publication 334 – Tax Guide for Small Business (For Individuals Who Use Schedule C)
Explains that sole proprietors, independent contractors, and members of partnerships are self-employed for tax purposes. - IRS Self-Employed Individuals Tax Center
States: “You are self-employed if you: (1) Carry on a trade or business as a sole proprietor or an independent contractor, (2) Are a member of a partnership that carries on a trade or business, or (3) Are otherwise in business for yourself (including a part-time business).”
II. Independent Contractors Are Generally Self-Employed
Point
An individual who performs services for others and is not an employee is generally treated as an independent contractor and is self-employed.
Authorities
- 26 U.S.C. § 3121(d)(2) – Definition of employee
Defines employees; those not meeting the definition may be treated as independent contractors. - Rev. Rul. 87-41, 1987-1 C.B. 296 –
Lists 20 common law factors to determine worker classification (employee vs. independent contractor). - IRS Publication 1779 – Independent Contractor or Employee?
Provides guidance to distinguish between employees and independent contractors.
III. Partners in a Partnership Engaged in Business Are Self-Employed
Point
Partners are not employees of the partnership but are self-employed individuals, and their distributive share of income is subject to self-employment tax.
Authorities
- 26 U.S.C. § 1402(a) –
Includes distributive share of partnership income in self-employment earnings. - IRS Publication 541 – Partnerships
Clarifies that partners pay self-employment tax on their share of partnership earnings.
IV. Certain LLC Members May Be Treated as Self-Employed
Point
Members of LLCs taxed as partnerships may be treated as self-employed if they actively participate in the business.
Authorities
- Chief Counsel Advice Memorandum 201436049 –
Discusses treatment of LLC members for self-employment tax purposes. - IRS Publication 3402 – Taxation of Limited Liability Companies (LLCs)
Explains when LLC members are considered self-employed and subject to SE tax.