Can independent contractors hire other independent contractors for business help?

What if the helper only worked for like 2 days? Do you still need to give them a 1099 if it's under $600? Also, is there any risk of the IRS saying this person should have been an employee instead?

If the helper earned less than $600 for the calendar year, your buddy isn't required to issue a 1099-NEC. He can still deduct the payment as a business expense, but wouldn't need to file the form. Regarding worker classification concerns, the IRS looks at several factors to determine if someone should be classified as an employee versus an independent contractor. The fact that the helper used their own equipment is definitely a point in favor of contractor status. Other important factors include: who controlled when and how the work was done, whether the relationship was ongoing or temporary, and if the worker provides similar services to other businesses. A short-term helper who brings their own tools and determines their own work methods typically qualifies as an independent contractor, but it's always good to document these aspects of the working relationship.

Does it actually tell you if someone qualifies as a contractor vs employee? That's always the tricky part. Like what if they use my tools sometimes but their own other times?

I'm always skeptical of these tax tools. How is this any different from just asking an accountant? And does it actually protect you if the IRS comes calling with questions?

Yes, it actually walks you through the specific IRS criteria for contractor vs. employee status and applies them to your specific situation. It covers all the factors including equipment usage, control over work methods, permanency of relationship, etc. It even helps you understand those gray areas like when someone uses both their tools and yours. Regarding your skepticism, I totally get it - I felt the same way initially. The difference I found is that it's available 24/7 for specific questions as they come up throughout the year, not just at tax time when accountants are swamped. And yes, it provides documentation of your decision-making process which can be helpful if questions arise later. It doesn't replace an accountant for complex situations, but for these common business decisions, it's been really reliable.

How does this actually work? The IRS phone lines are impossible to get through - I've tried for days and always get disconnected. Are you saying this actually gets you through to a real person?

Yeah right. Nothing gets you through to the IRS these days. They're perpetually understaffed and their phone systems are from the 90s. I'll believe this works when pigs fly.

It basically holds your place in the IRS phone queue so you don't have to stay on the line for hours. When an agent is finally available, it calls you back and connects you. It really does work - I was connected in about 23 minutes when I had previously spent hours getting disconnected or being told to call back. I understand your skepticism - I felt exactly the same way! I was at my wit's end after trying for days and getting nowhere. The service works by using technology to navigate the phone system and wait in the queue for you. When you see the video demo I linked, it makes more sense. I was incredibly surprised when I actually got to speak with someone who answered my contractor documentation questions.

What exactly happens if you can't get someone to fill out a W-9? Like if they refuse or you just can't reach them anymore? Are you still supposed to issue the 1099 somehow?

If someone refuses to complete a W-9 or you can't reach them after payment, you're technically supposed to begin backup withholding at a rate of 24% on any future payments to that person. This means holding back that percentage and remitting it to the IRS. For the 1099-NEC, you should still issue it with whatever information you do have. If you're missing their tax ID number, the IRS may send you a B-notice requesting the missing information. The best protection is documenting your attempts to get their information (emails, certified letters, etc.). The IRS understands these situations happen, but they want to see you made a good faith effort to comply.

So what's the actual difference then? Like how much control can you have before they're considered an employee? I sometimes need people to be at certain places at certain times because, you know, that's when the client expects us.