Ace the Certified Payroll Pro Test 2026 – Payroll Masters, Your Time to Shine!

Employees are categorized for tax purposes based on their relationship to the employer, which includes whether they are classified as employees or independent contractors. This classification is essential because it affects tax obligations and entitlements to benefits. Employees typically have taxes withheld from their paychecks and are entitled to various workplace benefits, while independent contractors are responsible for paying their own taxes and do not receive the same level of benefits.

Understanding this distinction is vital for compliance with tax laws and for ensuring that both parties are aware of their rights and responsibilities. The other categories mentioned, such as part-time or full-time, regular workers or subcontractors, and salaried or hourly workers, pertain to different aspects of employment that do not necessarily align directly with tax obligations or classification for tax purposes. These distinctions are relevant for employment policies and payroll calculations but do not provide a comprehensive view of how workers are classified for tax purposes.