Direct answer
As of August 2026, a medical practice should classify a worker from the actual relationship, not the job title, payment method, professional license, or a contract label alone. Federal tax analysis considers behavioral control, financial control, and the type of relationship; state labor, unemployment, professional-practice, and other rules may use different tests.
Document how the work actually operates
Record who sets schedules, directs methods, supplies tools and staff, controls patient assignments, bears unreimbursed costs, can realize profit or loss, offers services to the market, and expects the relationship to continue. Compare the documents with day-to-day practice.
Review more than federal tax classification
A federal employment-tax conclusion may not resolve state wage, unemployment, workers’ compensation, benefits, licensing, corporate-practice, malpractice, or payer questions. Coordinate the review with qualified employment and healthcare counsel.
| Classification area | Facts to document |
|---|---|
| Behavioral control | Instructions, schedule, supervision, training, protocols, evaluation, and control over methods |
| Financial control | Investment, expenses, payment structure, profit or loss opportunity, and market availability |
| Relationship | Written terms, benefits, permanence, termination rights, and whether services are central to the business |
| Practice-specific rules | Licensing, professional-entity ownership, payer terms, malpractice, credentialing, and clinical control |
| Tax administration | Payroll setup, deposits, returns, Forms W-2 or 1099, taxpayer identification, and records |
| Review cadence | Changes in duties, hours, control, exclusivity, locations, equipment, or payment arrangements |
Align payroll and reporting with the conclusion
For employees, establish payroll withholding, deposits, returns, benefits treatment, and employment-tax records. For contractors, review vendor onboarding, taxpayer identification, information reporting, payment records, and the continuing facts of the relationship.
Address uncertainty before it compounds
If federal tax status remains unclear after reviewing the common-law factors, Form SS-8 is an IRS process for requesting a determination. Filing can take time and does not replace advice about state or non-tax rules.
Primary sources
Frequently asked questions
Does paying a physician on Form 1099 make the physician an independent contractor?
No. Tax reporting follows the classification; it does not determine the classification. Review the actual facts and all applicable federal and state rules.
Does a written independent-contractor agreement settle the issue?
No. The agreement is one fact. The real working relationship and applicable legal tests also matter.
Can the IRS decide worker status?
Form SS-8 allows a business or worker to request an IRS determination for federal employment-tax and withholding purposes when status remains uncertain.