Lisa from Raleigh, North Carolina asks,

Q: If I am an independent contractor, ( I do senior companionship and caregiving) can you tell me what the limit is for the amount of money I can make before I have to file an IRS 1099 form? Also what do I have to provide my clients in the way of a social security number etc. and what to they have to provide me with before filing?

A: According to the IRS, the Form W-2 is used
by employers to report wages, tips and other compensation paid to an employee.
The form also reports the employee's income tax and Social Security taxes
withheld and any advanced earned income credit payments. The Form W-2 is provided
by the employer to the employee and the Social Security Administration. A
Form 1099-MISC is used to report payments made in the course of a trade or
business to another person or business who is not an employee. The form is
required among other things, when payments of $10 or more in gross royalties
or $600 or more in rents or compensation are paid. The form is provided by
the payor to the IRS and the person or business that received the payment.

How do you determine if a person is an employee or an independent contractor?

The determination is complex, but is essentially made by examining the right to control how, when, and where the person performs services. It is not based on how the person is paid, how often the person is paid, or whether the person works part-time or full-time. There are three basic areas which determine employment status:

- behavioral control

- financial control and

- relationship of the parties

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