Florida Real Estate Sales Associate Examination Content OutlineReal Estate Brokerage Activities and ProceduresEasy
A real estate sales associate is employed by a broker and is compensated solely by commission. The sales associate works flexible hours, uses their own vehicle, and covers their own business expenses. Under federal tax law, how is this sales associate most likely classified?
- AIndependent Contractor
- BEmployee
- CStatutory Employee
- DTemporary Worker
Show answer & explanationAnswer & explanation
Correct answer: A. Independent Contractor
Under federal tax law, a real estate sales associate compensated solely by commission, working flexible hours, and responsible for their own expenses is typically classified as an independent contractor. This provides certain tax advantages and operational flexibility.
Why the other options are wrong
- B. An employee would typically have set hours, be reimbursed for expenses, and receive a salary or hourly wage.
- C. Statutory employees are a specific classification for certain workers who are treated as employees for some tax purposes but as independent contractors for others; this doesn't fit the full description.
- D. Temporary worker refers to the duration of employment, not the employment classification for tax purposes.
Independent Contractor (Real Estate)
A real estate licensee who works under the supervision of a broker but is not considered an employee for tax purposes, typically compensated by commission and responsible for their own expenses and work schedule.
- Paid solely on commission.
- Works flexible hours.
- Responsible for own expenses and taxes.
- Broker provides general supervision, not daily control.
Memory trick: Contractor: Own boss, own bucks, own bills.