California Real Estate Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

An employee is defined as an individual who works for an employer and receives a regular wage or salary in exchange for their services. As such, they are subject to income tax, social security tax, and Medicare tax, which are withheld by their employer. In contrast, an independent contractor is defined as someone who provides services to a client and is in business for themselves. They are responsible for paying their own taxes, including income tax and self-employment tax. The scope of work performed, commission rate, and availability for work may vary for employees and independent contractors in the real estate industry, but these factors do not determine their tax classification.