ICs: no withholding, own taxes, no benefits required
Before you read
Test yourself first: 5 questions
Question 1 of 5
Most real-estate salespeople work for their broker as:
Answer: A. Agents are commonly independent contractors (with a written IC agreement) rather than employees, though the broker still supervises their licensed activity.
Question 2 of 5
Which factor most strongly indicates that a real estate salesperson is properly classified as an independent contractor rather than an employee?
Answer: B. A hallmark of independent-contractor status is that compensation is tied to results (commissions) rather than hours, and the broker does not control the details of how work is performed.
Question 3 of 5
Under an independent-contractor arrangement, who is generally responsible for paying the salesperson's income and self-employment taxes?
Answer: B. Independent contractors are responsible for paying their own income and self-employment taxes; the broker does not withhold taxes as it would for an employee.
Question 4 of 5
Which of the following is characteristic of an EMPLOYEE relationship between a broker and a salesperson rather than an independent-contractor relationship?
Answer: B. An employer's right to control the details of the work, including hours and methods, signals an employee relationship rather than an independent contractor one.
Question 5 of 5
Regardless of whether a salesperson is classified as an independent contractor for tax purposes, the broker remains responsible for which of the following?
Answer: B. Even with independent-contractor tax status, real estate licensing law requires the broker to supervise the affiliated licensee's professional activities.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- IRS safe harbor: licensed + written IC agreement + pay tied to sales (not hours)
- ICs: no withholding, own taxes, no benefits required
- Broker still supervises license-law compliance either way
- Broker CAN require contracts/ethics compliance without creating employment
- Misclassification = IRS + labor-law trouble
Independent Contractor vs Employee: FAQs
Is Independent Contractor vs Employee on the real estate exam?
Yes. Brokerage & Practice is a scored domain on the real estate licensing exam, and this topic appears in the national portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
