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Tax Court Rejects Rules Adjunct Professor Was An Employee Not An Independent Contractor For Tax Purposes

Employee v Independent Contractor

In a Memo, the Tax Court concluded that an adjunct professor was an employee for tax purposes as opposed to an independent contractor.  As a consequence of being an employee as opposed to an independent contractor, the professor was not eligible to deduct expenses on schedule C, but instead on schedule A.  In the situation, the professor taught 4 online courses and was not under an exclusivity agreement with the university.

The taxpayer went ahead and deducted the expenses on Schedule C taking his chances at a positive ruling.  Because the university exercised sufficient control to establish an employer-employee relationship, among other factors, the taxpayer was considered to be an employee and not an independent contractor.

Editor’s Comment

Many employers look to classify workers as independent contractors as opposed to that of an employee.  In this case, the worker wanted to be the independent contractor in order to take expenses and reduce the applicable taxes.  While the professor had a good case for this, the fact that he received a W-2 and was on the University payroll as an employee, went a long way to make him an employee for tax purposes.  It is my advice that those in this ambiguity between an independent contractor and employee make sure they get the designation right.  Getting this wrong can cost some money.

By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors