TN 3 (07-09)

RS 02101.054 Payment of Business Expenses

Citations: IRS Revenue Ruling 55-144

A. Employee status

A worker is generally an employee if the employer pays the worker's business or travel expenses. Controlling the expenses indicates the right to regulate and direct the worker's business activities.

B. Independent contractor status

A worker who is paid on a job basis and who has to take care of all incidental expenses is generally an independent contractor. The worker does not need to account for expenses and is free to establish the methods and means of work. Independent contractors may typically incur any of the following business expenses:

  • advertising;

  • depreciation;

  • insurance;

  • inventory or cost of goods sold;

  • leasing of equipment;

  • licensing, certification, or professional dues;

  • payments to business managers and agents;

  • postage and delivery;

  • rent and utilities;

  • repairs and maintenance;

  • supplies;

  • tools and equipment;

  • training;

  • travel; or

  • wages or salaries of assistants.

    NOTE: Independent contractors are normally responsible for many of the elements of this list. Responsibility for only a few elements may not be indicative of independent contractor status. For example, an attorney at SSA, who is clearly an employee, is independently responsible for maintaining licenses, certificates, or professional dues. Likewise, attorneys, depending on their individual Bar requirements, may be independently responsible for certain training. Further, as noted in (RS 02101.056), small tools are often the responsibility of employees.

C. Reference

Social Security Handbook, Chapter 816 : Does your employer pay your business and traveling expenses?


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/0302101054
RS 02101.054 - Payment of Business Expenses - 11/13/2009
Batch run: 11/13/2009
Rev:11/13/2009