2024 IRS Form SS-8: Instructions + PDF Download

What is Form SS-8?

Form SS-8 is an IRS form that is used to determine a worker’s employment status for purposes of income and employment tax withholdings. Businesses should consider filing an SS-8 if they’re unsure if the worker they hired is classified as an employee or an independent contractor.

What is an SS-8 form used for?

Form SS-8 is titled “Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.” That might seem like a bit of a mouthful, but the form is easier to understand than it sounds. Basically, Form SS-8 is used to ask the IRS for an official determination of a worker’s employment status.

This form is filed when a business is unsure if one or more of their workers should be classified as an employee or an independent contractor. This is an important question because it will determine many of the business’ potential employer responsibilities, such as health insurance, retirement benefits, etc.

Also, if the worker is an employee, they are subject to employment and income tax withholdings, but if they’re an independent contractor, then they are not subject to withholdings. Filing Form SS-8 will clarify this issue and allow you to classify the worker(s) in question correctly.

Do I have to file Form SS-8?

While you are not required to file Form SS-8, you are required to properly classify and report all employees and independent contractors, using Form W-2 for employees, and Form 1099 for contractors. If you’re unsure of how to classify one or more workers, then it may be wise to file form SS-8 with the IRS to get an official determination of the worker’s classification.

In general, the IRS wants workers to be classified the same as other workers doing similar tasks. For example, if a restaurant typically classifies cooks as employees, then the IRS wants newly-hired cooks to be classified as employees too. If they typically classify cooks as contractors, then the IRS wants newly-hired cooks to be classified as contractors too. And while no one never recommends attempting to circumvent the IRS, it’s worth keeping in mind that filing Form SS-8 could open up your business to additional — and potentially unwanted — scrutiny over your classification of employees vs. contractors.

Before we get into the specifics, the first thing you’ll want to do is download a copy of Form SS-8 and take a few moments to review it.

How to complete Form SS-8

In addition to fields you’ll fill in, the IRS wants to make sure employers know that:

• The information on the form may be disclosed to the business, the worker, or to the entity that pays the employee’s worker’s compensation, if that entity is different from your firm.
• If you don’t know an answer to a question or field, enter “Unknown” or “Does not apply”.
• If you need more space for an answer, attach an extra sheet of paper and clearly mark which section and question it relates to, along with either the firm’s name and EIN, or the worker’s name and SSN.

Part I: General Information

This section collects general information about your firm and your worker’s relationship to the firm. You’ll need to answer:

1. Who is completing the form – the firm or the worker.
2. Explain why you are filing the form. For example, if you are filing as a firm, you might have received a bill from the IRS for payroll taxes or you might be getting audited by the IRS.
3. List the number of workers performing similar services to the worker in question.
4. Select whether the worker gained employment through an application, a bid, an employment agency, or some other way.
5. Attach copies of supporting documentation including:
   1. Contracts
   2. Invoices
   3. Memos
   4. Forms W-2 or Forms 1099-NEC (or Forms 1099-MISC, if applicable) issued or received
   5. IRS closing agreements
   6. IRS rulings

In addition, include details of any current or past litigation regarding the worker’s status. If no W-2 or 1099-NEC was issued, include information on the total compensation the worker received.

6. Describe your business

7. Provide details about any merger, reorganization, or sale or purchase of your business.
8. Provide your worker’s title, and describe what they do for your business.
9. Explain why you believe they are either an employee or an independent contractor.
10. Detail any services the worker provided to your firm prior to the services in question.
11. If the worker has a written agreement with the firm, then you’ll need to provide a copy of the agreement and describe the terms and conditions of the arrangement.

Part II: Behavioral Control

In this section, the IRS wants to understand the level of involvement or independence of the worker. Generally, the more independent a worker is, the more likely they are to be considered a contractor. You’ll need to tell them:

1. What training and instruction are you giving your worker?
2. How does your worker receive assignments?
3. Who dictates how assignments will be completed?
4. Who is the go-to problem solver when problems or complaints come up, and who is ultimately responsible for resolving the issues?
5. What reports do you require the worker to submit to you – and provide examples.
6. Describe the worker’s routine, including schedule and hours.

7. Where does the worker do his or her work? If in multiple locations, provide percentages of time.
8. Does the worker have to attend meetings and are there penalties for missing meetings?
9. Is the worker required to do the work personally or are they allowed to subcontract out the work?
10. If the worker needs someone to fill in or assist them, do they find the help or do you?
11. Do you have to approve hiring additional workers?
12. Who pays the additional workers?
13. Do you reimburse the worker if they are paying the additional workers?

Part III: Financial control

In this section, the IRS asks how financially invested the worker is in your business and vice versa. Who carries the brunt of the financial risk? Who buys supplies? Who determines prices for the customers?

Here are the questions you’ll need to answer:

1. List separately all supplies, equipment, materials, and property that are provided by you, your worker, and any additional third party.
2. Does the worker lease space somewhere to work? If so, provide a copy of the lease and describe the terms.
3. Explain any expenses the worker incurs while performing work on your behalf.
4. List any expenses for which the worker is reimbursed by you or another party.
5. Select the type of compensation the worker receives – salary, commission, hourly wage, piece work, etc.

6. Does the worker have a drawing account for advances? If so, how often are they allowed to use it and what, if any, are the restrictions?
7. Who does the customer pay directly – you as the firm or the worker? Do they pay the full amount to you or the worker, or do they pay a percentage to both you and to the worker?
8. Do you carry workers’ comp insurance on your worker?
9. Does the worker carry the risk of economic loss or financial risk, beyond loss of salary? Who is on the hook if equipment or materials are lost or damaged?
10. Does the worker determine how much customers pay for your service or products?

Part IV: Relationship of the worker and firm

Now the IRS will ask about benefits, noncompete agreements, work instructions, and terms for termination. Things you’ll need to address:

1. In the check boxes, select any benefits provided for your worker.
2. Can either side terminate the relationship without penalty?
3. Did the worker perform similar services for other firms during the time frame under discussion?
4. Are there non-compete agreements in place in any way, shape, or form?
5. Is your worker a member of a union?

6. What advertising or marketing does the worker do for you, if any?
7. If the worker is remote, who provides materials, patterns, instructions, etc. for the work?
8. What does the worker do with the finished product? Send it to you? Send it to the customer? Something else?
9. How does the firm represent the worker to the public – do you call the worker a contractor, an employee, a representative, etc.? And under whose name does the worker perform his or her services?
10. If the relationship has been terminated, under what circumstances did the termination occur?

At this point, unless your worker is a salesperson or providing a service directly to customers, you will skip over Section V and sign the form.

Section V: For service providers & salespersons

If you are working with a salesperson or someone who delivers services directly to customers, answer the questions in Section V:

1. What responsibility does your worker have in soliciting new customers?
2. Who provides the worker with sales leads?
3. What, if any, are the reporting requirements regarding leads? Describe them.
4. Does the firm require specific terms and conditions of sale? If so, what are they?
5. Do customers submit orders to the firm, and does the firm have final approval on orders?
6. Who defines the worker’s sales territory?
7. Does your worker pay for the privilege of serving customers?

8. Where does the worker solicit sales?
9. What products or services does the worker distribute? If there are multiple services or products, which one is the core of the business?
10. Does your worker sell life insurance on a full-time basis?
11. Does the worker sell other kinds of insurance for you? If so, what percentage of time is spent on the other types as a group?
12. If your worker solicits orders from other entities, provide the percentage of time they spend doing that.
13. Is the merchandise purchased by your customers used for resale or in their business operations?

Once completed, you’ll need to file the Form with the IRS. Don’t forget to sign and date.

What happens after you file a Form SS-8?

After you file form SS-8, the IRS will review the form and come to a determination of the worker’s employment status. They will then send you a letter detailing their determination, and you can begin treating the worker as either an employee or an independent contractor.

If they are determined to be an employee, you’ll need to adhere to all employment laws, including withholding the appropriate income and employment taxes, offering legally required employment benefits, and insuring the worker appropriately. If they are determined to be a contractor, you do not need to withhold employment and income taxes or offer employment benefits, but you may still be interested in insuring them or their work, depending on their responsibilities.

Once their status has been determined, it may be worth using a reputable payroll software to make managing the worker’s employment or contractor relationship easy and stress-free.

How long does it take for the IRS to process Form SS-8?

The IRS’s processing times can vary significantly, but the IRS website states that it can take “at least 6 months to receive an IRS decision.” Six months is a long time, so if you need to file Form SS-8, make sure you file it as early as possible.

If you have not received a determination before you file your tax return, the IRS says to file the return anyways. If their decision contradicts what your tax return said, they require you to file an amended tax return to report the difference. If their decision aligns with your tax return, then no further action needs to be taken.