According to IRS guidelines, it is possible to have a W-2 employee who also performs work as a 1099 independent contractor so long as the individual is performing completely different duties that would qualify them as an independent contractor.
An employee owning their own business is not a requirement, but rather one of the factors to consider when determining if someone may be properly classified as an independent contractor. If you feel confident in the IRS criteria on the whole, you may classify their separate work as independent contractor work. But, be sure! It is widely believed among tax professionals that having a worker receive both a W-2 and 1099 increases the likelihood of an IRS audit.
Learn more about how our cloud-based time and labor solution keeps W2 and 1099 paperwork organized and easy to understand.
If you’d like to learn more about the IRS test for independent contractor classification, you can watch our 2-Minute HR Training on the topic or check out the Independent Contractor Classification Guide on the HR Support Center.
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